Late filing penalties and how to appeal
6 Apr 2021
As the Covid pandemic continues to impact small UK businesses, many are struggling to meet normal tax filing deadlines. HMRC has offered some help by delaying certain filing and appeals deadlines. But most dates and penalties stay the same, so many small companies face a challenge to meet all the deadlines this year.
The sooner you get these dates in your diary, the easier it will be to keep on top of your filing schedule. This article also explains the latest appeals processes and deadlines, should you need them.
This article covers
Companies House late filing
All companies must send their annual accounts to Companies House and late filing incurs an automatic penalty.
The period allowed to file your accounts depends on whether these are your first accounts since incorporation or subsequent accounts.
For private companies, if your first accounts cover more than 12 months, you must deliver them to Companies House within 21 months of incorporation, or three months from the accounting reference date - whichever is longer.
After your first year, you have nine months from the end of the accounting reference period.
The penalties for late filing are between £150 and £1500, depending on how late they are. The penalty doubles if you miss the deadline two years in a row.
| Time since the deadline | Penalty |
|---|---|
| Up to 1 month | £150 |
| 1 to 3 months | £375 |
| 3 to 6 months | £750 |
| More than 6 months | £1,500 |
If an exceptional, unforeseen event is going to make you late, you can apply for more time but only if you apply before the deadline.
HMRC late filing penalties
Your company must also meet reporting deadlines with HMRC - including for corporation tax, VAT returns, PAYE reports, and expenses and benefits reports (P11Ds).
As part of the Making Tax Digital initiative, you must use accounting software to submit your VAT returns. If HMRC does not receive your VAT return by the deadline, usually one calendar month and seven days after the end of an accounting period, you may enter a 12-month ‘surcharge period’. If you default again during this time, the surcharge period extends for a further 12 months, and you may have to pay an amount on top of the VAT you owe.
For PAYE, you are required to use your payroll software to send a Full Payment Submission (FPS), which tells HMRC about payments to your employees and deductions. A late FPS may incur a penalty of between £100 and £400 a month depending on how many employees you have.
You must also submit your company’s P11D or P11D(b) for the previous tax year before 6 July. That means the return date for 2020/21 will be 6 July 2021. The penalties for late submissions are up to £300 plus £60 a day if the failure continues, plus interest.
The deadline for filing corporation tax returns is usually 12 months after your accounting period ends. You can check your accounting period in your HMRC business tax account. Late filing may incur interest and penalties ranging from £100 for being one day late to 20% if you are 12 months late.
| Time since the deadline | Penalty |
|---|---|
| 1 day | £100 |
| 3 months | Another £100 |
| 6 months | HMRC's estimate of your Corporation Tax bill plus 10% of the unpaid tax |
| 12 months | Another 10% of any unpaid tax |
Self Assessment late filing penalties
The deadline for filing personal Self Assessment tax returns is 31 January. So, for the tax year 2020/21, it will be 31 January 2022. Late filing incurs penalties. Due to coronavirus, HMRC extended the date from which you would receive a penalty to 28 February, after which you will be liable to a £100 penalty if your tax return is up to three months late.
Beyond three months, there are fixed, daily and tax gear penalties.
| Time since the deadline | Penalty |
|---|---|
| 1 day | £100 penalty |
| 3 months | £10 daily penalty for up to 90 days (maximum £900) plus the previous penalty |
| 6 months | 5% of the tax due or £300 (whichever is greater) plus the previous penalties |
| 12 months and later | An additional 5% of tax due or £300 (whichever is greater) |
How to appeal a penalty
If you have a reasonable excuse for late filing, you can appeal to HMRC to cancel or amend your penalty. An HMRC officer who was not involved with your penalty decision will review your appeal.
If HMRC sends you a penalty letter, use the enclosed appeal form or follow the instructions on the letter.
For Self Assessment, PAYE, VAT and corporation tax, there are extra documents you can use or alternative ways to appeal.
If you did not send a Self Assessment tax return because you no longer need to, tell HMRC about this through your government gateway account or call the helpline.
Otherwise, you can appeal online through your government gateway account or by post. If you do not have a government gateway, you will need to set one up to appeal online.
For a PAYE penalty, you can appeal online through your relevant government gateway account if you are registered. Once logged in, select ‘Appeal a penalty’.
For a late VAT return use this form. For late corporation tax or VAT returns use this one if you filed late because of computer problems.
Alternatively, send a signed letter to the HMRC office related to your return. Include your name; reference number, such as Self Assessment unique taxpayer reference or VAT registration number; and say why your return or payment was late, including dates.
Finally, use this service to appeal a penalty for late filing of annual accounts to Companies House.
Appeal deadlines
You must appeal within 30 days of the penalty notice date, or explain the reason for any delay beyond this. If coronavirus has affected you or your business, HMRC will allow an extra three months to appeal any penalty dated February 2020 or later.
If you disagree with HMRC’s review, you can also refer to the tax tribunal or alternative dispute resolution.
The content on our site is provided for general information only. Obtain specialist advice before taking, or refraining from, any action on the basis of the content on our site.
