It is very important to know the obligation related to corporation tax. If you have any trouble in dealing with corporation tax late payment. The knowledge of penalties for late payment and potential interest will keep you going.
Here you will figure out everything that you need to know about what happens if you are in a situation where a corporation tax late payment is made. In this blog, we will cover the following:
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What Defines Corporation Tax?
A type of business tax that is based on your annual business profit is called corporation tax. The way we calculate income tax for individual taxpayers, and corporation tax is much more like it. However, you don’t receive corporation tax bills, and this means when you intend to start a business you will need to register for tax.
To know the accurate amount of corporation tax, ensure to prepare accounting records and tax returns. The current rate of corporation tax is 19 percent.
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Deadline For Paying Corporation Tax:
Once your accounting period ends, you need to ensure corporation tax payment within nine months and a day. In most cases, the accounting period is twelve months like the financial year covered by the company accounting and records. Let’s take an example of your accounting period is ending on the 31st of March (usually in most of the companies). On 1st January, you are required to pay your corporation tax.
As soon as you approach the end of your accounting period, it is wise to prepare to pay your corporation tax. In some cases, people start to prepare very late and end up paying a large bill which is too hard b to handle. This leads to corporation tax late payments and ends up on penalties.
If you are seeking a professional word of advice, feel free to approach us at Accotax and schedule a meeting to get instant help!
Corporation Tax – Late Filing Penalties:
Now that you understand what is corporation tax and its deadlines, the question that arises here is what if you make a corporation tax late payment or what are the possible penalties? In such cases of paying corporation tax too late or not pay at all, you will not be surprised by HMRC hitting fines. Penalties and late payment interest are on you.
Some of the late filing penalties are mentioned below for you:
- If you are one day late in making a corporation tax payment, the penalty will be 100 pounds.
- In case of three months late payment, there will be an addition of 100 more pounds.
- 10% of your unpaid tax bill will become your penalty if you are six months late.
- Another 10% will be added to your unpaid tax bill if you make it twelve months late.
Additionally, the penalties do not just stop there for corporation tax late payment, because if you are a habitual late payer and your payments are late three times in a row. An addition of 500 pounds will be added to your penalties rather than 100 pounds.
Other than late fines the late payment interest is an uncalled surprise to be taken care of as well. Moreover, if you make a corporation tax late payment, or pay too little then what is required can end up paying the company interest charged by HMRC. The same might happen if you don’t pay the corporation tax at all. Right after the due date of paying the tax, interest will be charged.
The usual interest rate is 2-3% and this continues to increase unless you make the payments clear.
To give final thoughts to this discussion about late filing penalties, we can say that if you are not able to pay tax, you must seek a prudent way of solution. There are several options that you can pursue to save yourself from penalties. You can approach HMRC directly to get a viable solution to your business problems.
There might be the option of instalments to pay your corporation tax under a certain time period. We hope this blog helped you to understand corporation tax late filing penalties in a much better way.