HMRC and Companies House Penalties: Late Filing and Payment 2023/24 Explained

Late filing and late payment of taxes can be a costly mistake for businesses. In the UK, HM Revenue and Customs (HMRC) and Companies House are the two main government bodies responsible for collecting taxes and regulating businesses. Both organizations impose penalties for late filing and late payment of taxes, which can range from a few hundred pounds to several thousand pounds.

Understanding HMRC and Companies House penalties is essential for businesses to avoid unnecessary costs and legal issues. Late filing penalties apply to businesses that fail to submit their tax returns or accounts by the deadline. Late payment penalties apply to businesses that fail to pay their taxes on time. Both penalties can increase over time, so it is crucial to take action as soon as possible to avoid further financial consequences.

In this article, we will provide an overview of HMRC and Companies House penalties for late filing and late payment in 2023/24. We will also cover specific details about VAT penalties, interest and repayment rules, appeals and reviews, compliance and support, and specifics for different business types. Additionally, we will discuss changes in penalties for the current year and answer some frequently asked questions. By the end of this article, you will have a better understanding of how to avoid penalties and comply with tax regulations.

Key Takeaways

• Late filing and late payment of taxes can result in costly penalties from HMRC and Companies House.
• Understanding the specific penalties and regulations for your business type is crucial to avoid financial consequences.
• Taking action as soon as possible can help prevent penalties from increasing over time.

Understanding HMRC and Companies House Penalties

Late filing and late payment of taxes can result in penalties from HMRC and Companies House. Understanding the rules and regulations surrounding these penalties is important to avoid them. Here’s what you need to know:

HMRC Penalties

HMRC imposes penalties for late filing and late payment of taxes. The penalties for late filing are based on the number of days that the tax return is late. The penalties increase the longer you take to file your tax return, and can be as high as £1,600 for a tax return that is over a year late.

Late payment penalties are charged when you don’t pay your tax bill on time. The penalties are based on the amount of tax that is unpaid and the length of time that it remains unpaid. You will be charged interest on any unpaid tax as well.

Penalty Type	Basis for Calculation	Maximum Penalty
Late Filing	Number of days late filing	£1,600 (over 1 year late)
Late Payment	Amount of unpaid tax and duration	Varies by amount and duration, with added interest on unpaid tax

Companies House Penalties

Companies House also imposes penalties for late filing of company accounts. The penalties are based on the length of time that the accounts are overdue and the status of the company. Private companies can be fined up to £1,500 for accounts that are filed late, while public companies can be fined up to £7,500.

If a company fails to file its accounts for two consecutive years, it can be struck off the register and dissolved. This means that the company will no longer exist and its assets will be forfeited to the Crown.

Penalty Type	Basis for Calculation	Maximum Penalty
Late Filing	Time accounts are overdue and company status	£1,500 (private companies), £7,500 (public companies)
Strike Off & Dissolution	Failure to file for two consecutive years	Company dissolution and asset forfeiture

Late Filing Penalties

Late filing penalties are charged when you don’t file your tax return or company accounts on time. The penalties are based on the length of time that the return or accounts are overdue and the status of the company. Late filing penalties can be as high as £1,500 for a company that files its accounts more than six months late.

Penalty Type	Basis for Calculation	Maximum Penalty
HMRC – Tax Return	Time overdue and company status	Up to £1,500 (over 6 months late)
Companies House – Accounts	Time overdue and company status	Up to £1,500 (private companies), additional for longer delays

Late Payment Penalties

Late payment penalties are charged when you don’t pay your tax bill or file your accounts on time. The penalties are based on the amount of tax that is unpaid and the length of time that it remains unpaid. Late payment penalties can be as high as 15% of the unpaid tax for a company that is six months late in paying its tax bill.

In conclusion, it is important to understand the rules and regulations surrounding HMRC and Companies House penalties to avoid them. Late filing and late payment can result in significant penalties and interest charges. Ensure that you file your tax returns and company accounts on time and pay your tax bill promptly to avoid penalties.

Penalty Type	Basis for Calculation	Maximum Penalty
HMRC – Tax Payment	Amount of unpaid tax and duration	Up to 15% of unpaid tax (over 6 months late)
Companies House – Accounts Payment	Amount of unpaid tax and duration	Varies by amount and duration, with interest charges

Late Filing Penalties: An Overview

Late filing of accounts or tax returns can lead to penalties being imposed by HMRC or Companies House. It is important to understand the deadlines for submitting your accounts or tax returns to avoid these penalties.

If you are a private company or LLP, you must deliver your first accounts to Companies House within 21 months of the date of incorporation. Subsequent accounts must be delivered within 9 months of the end of the accounting period. Failure to meet these deadlines will result in late filing penalties being imposed by Companies House.

If you are a sole trader, partnership, or limited company, you must submit your tax return to HMRC by the deadline of 31 January following the end of the tax year. Failure to meet this deadline will result in late submission penalties being imposed by HMRC.

The penalties for late filing or late submission can be significant and can increase the longer you delay. Companies House imposes an initial penalty of £150 for late filing, which increases to £375 if the accounts are more than 6 months late. HMRC imposes an initial penalty of £100 for late submission, which increases to £1,600 if the tax return is more than 12 months late.

It is important to note that late filing penalties and late submission penalties are separate and distinct penalties. Late filing penalties are imposed by Companies House for late filing of accounts, while late submission penalties are imposed by HMRC for late submission of tax returns.

If you are struggling to meet the deadlines for submitting your accounts or tax returns, you may be able to apply for an extension. However, you must have a valid reason for the extension, and it must be requested before the deadline. If you do not have a valid reason for the extension, or if the extension is requested after the deadline, the penalties will still be imposed.

In summary, it is crucial to understand the deadlines for submitting your accounts or tax returns to avoid late filing or late submission penalties. Companies House and HMRC impose separate penalties for late filing and late submission, and these penalties can increase the longer you delay. If you are struggling to meet the deadlines, you may be able to apply for an extension, but you must have a valid reason and request the extension before the deadline.

Late Payment Penalties: A Detailed Look

If you fail to pay your taxes on time, you may face late payment penalties and interest charges. The amount of the penalty will depend on how late you are and how much you owe. HMRC and Companies House may apply different rules and rates for different taxes and types of returns.

Late payment penalties are calculated as a percentage of the outstanding tax due and can increase over time. For example, if you are 30 days late, you may face a penalty of 5% of the tax due. If you are 6 months late, you may face another 5% of the tax due at that date. If you are 12 months late or more, you may face another 5% of the tax due at that date.

The interest charged on late payments is based on the Bank of England base rate plus a set percentage. The interest rate may also vary depending on the type of tax and how late the payment is. For example, the current interest rate for late payment of Income Tax is 2.75%.

If you fail to pay your taxes on time, you may also face a default surcharge. This is an additional penalty that is applied if you miss more than one payment deadline in a 12-month period. The default surcharge is calculated as a percentage of the tax due and can range from 1% to 15%, depending on how many times you have missed a deadline.

If you are a VAT-registered business, you may also face a default surcharge for late submission of VAT returns. The default surcharge is calculated as a percentage of the VAT due and can range from 1% to 15%, depending on how many times you have missed a deadline.

It is important to note that late payment penalties and interest charges are separate from late filing penalties. If you fail to submit your tax return on time, you may face a separate penalty for late filing.

In order to avoid late payment penalties and interest charges, it is important to pay your taxes on time and in full. If you are unable to pay your taxes in full, you should contact HMRC or Companies House as soon as possible to discuss your options. They may be able to arrange a payment plan or offer other forms of support.

Overall, it is important to understand the rules and rates for late payment penalties, interest charges, and default surcharges in order to avoid financial penalties and maintain compliance with HMRC and Companies House regulations.

Understanding VAT Penalties

If you are a VAT registered business, it is important to submit your VAT returns and payments on time to avoid penalties. From 1 January 2023, new penalty points will be introduced if you submit a VAT return late, including nil payment returns. This means that if you are late with your VAT return, you will receive a penalty point, which will remain on your record for 24 months.

If you receive four or more penalty points within 24 months, you may be liable to a penalty of up to 15% of the VAT due on the return. This penalty will be in addition to any other penalties that may be due.

Late payment of VAT will also attract penalties. HMRC charges 4% from day 31 of the payment being overdue up to and including day 51 when the company pays in full. This works out as 21 days (£15,000 x 4% x 21/365 days) = £34.50. The total amount of the penalty will depend on how late the payment is and how much VAT is owed.

It is important to note that penalties for late payment of VAT will be charged separately from penalties for late submission of VAT returns. This means that if you are late with both your VAT return and payment, you could receive two separate penalties.

To avoid penalties, it is important to ensure that you submit your VAT returns and payments on time. You should also make sure that you keep accurate records of your VAT transactions, as this will make it easier to submit your returns on time.

If you are having difficulty paying your VAT, you should contact HMRC as soon as possible to discuss your options. HMRC may be able to arrange a payment plan or offer other support to help you manage your VAT payments.

In summary, VAT penalties can be costly and can have serious consequences for your business. To avoid penalties, make sure that you submit your VAT returns and payments on time and keep accurate records of your VAT transactions.

Penalty Type	Basis for Calculation	Maximum Penalty
Late VAT Return	Accumulated penalty points within 24 months	Up to 15% of VAT due (after receiving 4 penalty points)
Late VAT Payment	Amount of unpaid VAT and duration	Varies by amount and duration, with interest charges

Interest and Repayment Rules

Late payment interest is charged on tax that is paid late. The current late payment interest rate is 7.75% from 22 August 2023, which is applied to the main taxes and duties that HM Revenue & Customs (HMRC) currently charges and pays interest on. This rate is subject to change, and you should check the HMRC website for the latest rates.

Late filing penalties are charged by Companies House if you fail to submit your annual accounts or confirmation statement on time. The penalties are progressive and start at £150 for private limited companies and £750 for public limited companies. These penalties increase depending on how long the accounts or statement are overdue.

Repayment interest is paid by HMRC when you have overpaid your tax. The current repayment interest rate is 0.5% from 22 August 2023, and this rate is also subject to change. Repayment interest is paid from the date the tax was due to the date it is repaid.

Interest harmonisation is a new system that is being introduced by HMRC to simplify the interest rules for all taxes and duties. This system will ensure that the same interest rates and rules apply to all taxes and duties, making it easier for taxpayers to understand how interest is calculated and applied.

Late filing penalties and late payment penalties are separate penalties that can be charged if you fail to submit your accounts or pay your tax on time. Late filing penalties are charged by Companies House, while late payment penalties are charged by HMRC.

If you fail to pay your tax on time, HMRC will charge you late payment interest. The interest is charged on the amount of tax that is unpaid after the due date, and the rate is currently 7.75%. If you pay your tax late but within 15 days of the due date, there is no late payment penalty. The first penalty is set at 2% of the outstanding amount if you pay between 16 days and 30 days after the due date.

In summary, it is important to ensure that you submit your accounts and pay your tax on time to avoid late filing penalties and late payment penalties. If you have overpaid your tax, you may be entitled to repayment interest. HMRC is introducing a new interest harmonisation system to simplify the interest rules for all taxes and duties.

Appeals and Reviews

If you disagree with the penalty for late filing or late payment from HMRC or Companies House, you have the right to appeal or request a review.

Appeals

You can appeal against a penalty from HMRC for sending your tax return late or paying your tax late. You must appeal within 30 days of the date HMRC sent you the penalty notice and have a reasonable excuse for filing late. A reasonable excuse is something unexpected or outside your control that stopped you from meeting a tax obligation, for example, a serious illness or a fire.

Similarly, you can appeal against a penalty from Companies House for filing your company accounts late. You can use the Companies House online service to appeal the penalty. You must have a reasonable excuse for filing late, such as a serious illness or a fire. If you appeal, the penalty will be put on hold until the appeal is decided.

Reviews

If you do not have a reasonable excuse for filing late, you may still be able to get the penalty cancelled or reduced if you have a reasonable excuse for not paying on time. You can request a review of the penalty from HMRC or Companies House, depending on who issued the penalty.

HMRC will consider a request for review if you have a reasonable excuse for not paying on time, such as a serious illness or a bereavement. If HMRC decides that you have a reasonable excuse, they may cancel or reduce the penalty.

Companies House will consider a request for review if you have a reasonable excuse for not filing on time, such as a serious illness or a fire. If Companies House decides that you have a reasonable excuse, they may cancel or reduce the penalty.

Discretion

In some cases, HMRC or Companies House may use their discretion to cancel or reduce a penalty, even if you do not have a reasonable excuse. For example, if you have a good compliance history or you take action to put things right, HMRC or Companies House may decide to cancel or reduce the penalty.

It is important to note that the decision to cancel or reduce a penalty is discretionary and will depend on the individual circumstances of the case.

In summary, if you receive a penalty for late filing or late payment from HMRC or Companies House, you have the right to appeal or request a review. You may also be able to get the penalty cancelled or reduced if you have a reasonable excuse or if HMRC or Companies House use their discretion.

The Points-Based System

Starting in April 2022, HMRC is introducing a new points-based penalty system for late submissions. The system is designed to be fairer and more consistent across taxes. It will apply to VAT customers initially, and from 6 April 2023, it will also apply to those submitting Income Tax Self Assessment (ITSA) and whose businesses and property income is over £10,000 per annum.

Under the new system, you will receive a penalty point every time you submit a tax return late or fail to make a payment on time. The number of points you receive will depend on the severity of the offence. Once you reach a certain penalty threshold, you will face a financial penalty.

The penalty threshold for VAT customers is four points. For ITSA customers, the penalty threshold will be two points. Once you reach the threshold, you will face a financial penalty. The penalty for VAT customers will be based on a percentage of the VAT due, while the penalty for ITSA customers will be a fixed amount.

It’s important to note that the points-based system will have separate points totals for late submission and late payment. This means that you could face penalties for both late submission and late payment if you fail to meet the deadlines.

It’s essential to ensure that you submit your tax returns on time and make payments when they are due to avoid being penalized under the new points-based system. If you do receive penalty points, it’s important to keep track of them to avoid reaching the penalty threshold and facing financial penalties.

Compliance and Support

As a business owner, it is important to be aware of the compliance requirements set out by HMRC and Companies House to avoid penalties for late filing and late payment. The penalties can escalate over time and can have a significant impact on your business’s financial health.

To ensure compliance, it is crucial to keep accurate records of all financial transactions and file returns on time. If you are unsure about any aspect of compliance, seek advice from a qualified professional to avoid any errors.

Small and medium-sized enterprises (SMEs) can benefit from support and advice provided by HMRC and Companies House. HMRC offers a range of online tools and resources to help businesses manage their tax affairs, including Making Tax Digital (MTD) software. MTD is a digital system that allows businesses to keep digital records and submit VAT returns online.

Companies House offers guidance on how to file annual accounts and confirmation statements, as well as how to register a new company. They also provide a range of online services, including the ability to file documents and access company information.

If you do receive a penalty for late filing or late payment, it is important to take action as soon as possible. HMRC and Companies House offer support and advice to help you resolve any issues and avoid further penalties.

In summary, compliance with HMRC and Companies House requirements is crucial for any business owner to avoid penalties for late filing and late payment. Seek support and advice from qualified professionals and take advantage of the online tools and resources available to ensure compliance with MTD and other requirements. If you do receive a penalty, take action to resolve the issue as soon as possible to avoid further penalties.

Specifics for Different Business Types

Late filing and payment penalties for HMRC and Companies House apply to different business types. Here’s what you need to know:

Private Limited Companies

Private limited companies must file their annual accounts and confirmation statement with Companies House. If you file your accounts late, you will face an automatic penalty. The penalty will increase the longer you delay filing your accounts. The penalty can be up to £1,500 for accounts filed more than six months late. If you file your confirmation statement late, you will face a penalty of up to £5,000.

Public Limited Companies

Public limited companies must also file their annual accounts and confirmation statement with Companies House. If you file your accounts late, you will face an automatic penalty. The penalty will increase the longer you delay filing your accounts. The penalty can be up to £7,500 for accounts filed more than six months late. If you file your confirmation statement late, you will face a penalty of up to £5,000.

Limited Liability Partnerships (LLPs)

LLPs must file their annual accounts and confirmation statement with Companies House. If you file your accounts late, you will face an automatic penalty. The penalty will increase the longer you delay filing your accounts. The penalty can be up to £1,500 for accounts filed more than six months late. If you file your confirmation statement late, you will face a penalty of up to £5,000.

VAT Registered Businesses

If you are a VAT registered business, you must submit your VAT returns on time. If you submit your VAT return late, you will face a penalty. The penalty will be a percentage of the VAT due and will depend on how late you are. If you submit your VAT return more than 12 months late, you will face a penalty of at least £400 or 5% of the VAT due, whichever is greater.

Corporation Tax

If you are a limited company, you must pay corporation tax on your profits. You must also file a corporation tax return with HMRC. If you file your corporation tax return late, you will face a penalty. The penalty will increase the longer you delay filing your return. The penalty can be up to £1,500 for returns filed more than six months late.

SMEs

Small and medium-sized enterprises (SMEs) can face the same penalties as larger businesses. However, HMRC and Companies House may take into account the size of your business and the reason for the delay when deciding whether to impose a penalty.

Making Tax Digital

Making Tax Digital (MTD) is a government initiative to make tax administration more efficient. From April 2023, all VAT-registered businesses with a taxable turnover above the VAT threshold must keep digital records and submit their VAT returns using MTD-compatible software. If you do not comply with MTD, you will face a penalty. The penalty will depend on the reason for the non-compliance and may be up to £400.

Timeline and Thresholds

Late filing and payment penalties can be imposed by both HMRC and Companies House. It is important to understand the deadlines and thresholds to avoid these penalties.

Companies House Penalties

For private limited companies, the deadline for filing annual accounts with Companies House is usually 9 months after the end of the accounting period. If you file your accounts late, you will be charged a penalty. The penalties for late filing are as follows:

• Up to 1 month late: £150
• 1 to 3 months late: £375
• 3 to 6 months late: £750
• More than 6 months late: £1,500

For public limited companies, the deadline for filing annual accounts is usually 6 months after the end of the accounting period. The late filing penalties are the same as for private limited companies.

HMRC Penalties

The deadline for filing your company tax return with HMRC is 12 months after the end of the accounting period. If you file your tax return late, you will be charged a penalty. The penalties for late filing are as follows:

• 1 day late: £100
• 3 months late: £100
• 6 months late: 10% of the unpaid tax
• 12 months late: 10% of the unpaid tax

If you are late paying your corporation tax, you will be charged interest and penalties. The penalties for late payment are as follows:

• 30 days late: 5% of the unpaid tax
• 6 months late: 5% of the unpaid tax at that date
• 12 months late: Another 5% of the unpaid tax at that date

You can estimate your penalty for late Self Assessment tax returns and payments by using HMRC’s online estimator.

Time to Pay

If you are struggling to pay your tax bill on time, you can contact HMRC to arrange a Time to Pay agreement. This will allow you to pay your tax bill in instalments over a period of time. However, you must contact HMRC before the payment deadline to arrange this. If you do not pay your tax bill on time or arrange a Time to Pay agreement, you will be charged interest and penalties.

Time Limits

It is important to note that there are time limits for appealing against late filing and payment penalties. For Companies House penalties, you have 28 days from the date of the penalty notice to appeal. For HMRC penalties, you have 30 days from the date of the penalty notice to appeal. If you miss these deadlines, you may not be able to appeal.

In summary, it is important to understand the deadlines and thresholds for filing your company accounts and tax returns to avoid late filing and payment penalties. If you are struggling to pay your tax bill on time, contact HMRC to arrange a Time to Pay agreement before the payment deadline. And remember, there are time limits for appealing against penalties, so act quickly if you wish to appeal.

Changes in 2023/24

In 2023/24, HMRC and Companies House have made some changes to their late filing and late payment penalties. These changes aim to make the system fairer, proportionate, and consistent for all taxpayers.

One of the most significant changes is the increase in penalty rates for late filing and late payment. The penalty rate for late filing of Self Assessment tax returns has increased to £200 or 5% of the tax due, whichever is higher. For late payment, the penalty rate is set at 2% of the tax outstanding after day 15, and if any of this tax is still unpaid after day 30, the penalty rate will be calculated as 2% of the tax outstanding after day 15 plus 2% of the tax outstanding after day 30.

These changes are intended to encourage taxpayers to file and pay on time and to deter those who may have been taking advantage of the previous lower penalty rates.

Another change is the introduction of a more consistent penalty regime across all taxes and duties. This means that the same penalty rates and rules will apply to all taxes and duties, making it easier for taxpayers to understand and comply with their obligations.

The changes also include a more proportionate approach to penalties, taking into account the level of culpability and the taxpayer’s compliance history. This means that taxpayers who make genuine mistakes or have a good compliance history may receive lower penalties or no penalties at all.

In conclusion, the changes in 2023/24 to HMRC and Companies House penalties for late filing and late payment are designed to make the system fairer, proportionate, and consistent for all taxpayers. The increase in penalty rates, introduction of a more consistent penalty regime, and more proportionate approach to penalties should encourage taxpayers to file and pay on time while also providing relief for those who make genuine mistakes or have a good compliance history.

Frequently Asked Questions

What are the consequences of filing company accounts late?

Late filing of company accounts can result in hefty penalties from Companies House. The amount of the penalty depends on how late the accounts are filed and the status of the company. For example, a private company with an accounting period ending 30 September 2019 must deliver acceptable accounts by 30 June 2020 to avoid a late filing penalty. Companies House may also take legal action against the company if the accounts are filed too late.

How can I pay the penalty for late filing at Companies House?

If you receive a penalty notice from Companies House for late filing, you can pay the penalty by making a cheque payable to ‘Companies House only’ and sending it along with the slip on the penalty notice (remittance advice) to Companies House. The address to send the payment is: Companies House, PO Box 710, Crown Way, Cardiff, CF14 3UZ.

What is the penalty for late payment of corporation tax to HMRC?

If you are late in paying your corporation tax to HM Revenue and Customs (HMRC), you will be charged interest and penalties. The penalty for late payment is 5% of the unpaid tax after 30 days, and another 5% after 6 months. If you are more than 12 months late in paying your corporation tax, you will be charged another 5% of the unpaid tax at that date.

Can I appeal a late filing penalty from Companies House?

Yes, you can appeal a late filing penalty from Companies House if you have a reasonable excuse for filing the accounts late. Some examples of reasonable excuses include serious illness, the death of a close relative, or a fire or flood that prevented you from filing the accounts on time. You can appeal online through the Companies House website or by writing to Companies House.

What are the penalties for late filing of CT600?

If you are late in filing your Company Tax Return (CT600) with HMRC, you will be charged a penalty. The penalty for filing late is £100 for the first day, another £100 after 3 months, and an estimated 10% of the unpaid tax after 6 months. If you are more than 12 months late in filing your CT600, you will be charged another 10% of the unpaid tax at that date.

Is it possible for HMRC to waive a late filing penalty?

HMRC may waive a late filing penalty if you have a reasonable excuse for filing your tax return late. However, HMRC will only waive the penalty if they agree that you had a reasonable excuse and that the excuse was beyond your control. Some examples of reasonable excuses include serious illness, the death of a close relative, or a fire or flood that prevented you from filing your tax return on time.