A Company Corporation Tax Penalties and How They are Considered

Over view of Corporation Tax Penalties:

If your company or Organization is liable for Corporation Tax Penalties, and you don’t meet HM Revenue and Customs deadlines and requirements, then you may face a penalty. 

If you have made an error, done something you should not have, or not done something you should have, you must correct it immediately. If you do, you may not be indicted a penalty or the penalty charged may be smaller amount. 

If your company or association does not meet its accountabilities for other taxes and duties, more penalties may also occur. 

Avoid Corporation Tax Penalties:

HMRC expects you to take sensible care over your company or organization’s tax dealings. If you took reasonable care but still make a blunder, HMRC may not charge a penalty or the amount of the penalty may be abridged. Examples of reasonable care contain following:

• Making sure your Company Tax Return is accurate and sending it into HMRC timely, this include ensuring all company accounts, computations, claims and calculations are correct. 
• Telling HMRC promptly (within 12 months of the end of you Corporation Tax accounting period) if your company or Organization has profits chargeable to Corporation Tax but HMRC has not sent you a notice to deliver a company tax return.
• Keep sufficient records to support your company tax return, company accounts and any claims to allowances and reliefs.
• Providing HM Revenue and Customs with all the information they need when they ask.
• Asking HM Revenue and Customs if you are not sure about anything and following any advice they give you.

If you determine you have made a error, or not told HMRC something you should have,  you should tell them instantly. This may reduce the amount of penalty you face or may mean you do not have to pay one at all. What sensible care means will depend on your company or organizations individual conditions.

If you don’t consent with the penalty HMRC has charged your company or organization, you can petition the verdict. 

Penalties for not telling HMRC you company is liable for Corporation:

If your company or organization has Corporation Tax Penalties to pay but you don’t receive a notice to deliver a company tax return from HMRC, you still must tell HMRC it’s liable for Corporation Tax. You must do this inside 12 months the finish of your Corporation Tax accounting period.

If you don’t, your company or organization may be charged a penalty. HMRC calls this a failure to notify penalty.

When a Penalty may araise?

If after 1, April 2010, you don’t tell HMRC that your company or organization is answerable for corporation tax, the penalty is based  on the amount of tax that’s  not paid or that your company or organization is liable for. This is called the possible lost revenue or PLR. 

But HMRC won’t charge a penalty if you had rational excuse for not notifying them at the right time, provided that you did so punctually after the cause for not notify them ended. 

How the penalty is calculated?

The sum of the penalty is calculated by applying a percentage to the amount of tax that you owe. The percentage applied depends on whether your mistake was:

• Careless – a lack of sensible care.
• Deliberate – such as intentionally sending incorrect information.
• Deliberate and concealed – such as intentionally sending incorrect information and taking steps to hide the error. 

While the utmost penalty HMRC can accuse your company or organization depends on the type of failure. It may be less if you:

• Tell HMRC rapidly and make a full revelation of all the facts.
• Help HMRC to calculate what’s owned and allow them access to records needed to do so.

The utmost penalty for each type of failure:

Type of failure Maximum penalty payable 

Non deliberate 30% of the potential lost revenue

Deliberate but not concealed 70% of the potential lost revenue

Deliberate and concealed 100% of the potential  lost revenue

keep in mind, if you took rational care but still made a mistake, HMRC won’t charge penality.

Penalties for not filling your Company Tax Return on time:

If HMRC has sent you a notice to deliver a company tax return and you do not file your return on time, your company or organization will be charged a penalty. 

Penalties for inaccurate Company Tax Returns, documents and information:

How the penalty is calculated:

The punishment is a percentage of the additional tax due when your fault is corrected. The amount of penalties you will countenance will depend on the kind of error and when you told HMRC concerning it. 

The penalty will be fewer if you tell HMRC about your mistake before they find out about it this is known as unprompted confession. If you told HMRC after they found out about fault. 

Penalties array for unprompted and prompted disclosure:

Type of error Penalty range for unprompted disclosure Penalty range for prompted disclosure

Careless 0% to 30% 15% to 30%

Deliberate but not concealed 20% to 70% 35% to 70%

Deliberate and concealed 30% to 100% 50% to 100%

 

If you took reasonable care, but still made a mistake, HMRC will not charge a penalty.

When different rules apply?

There are diverse rules for penalties where group relief, losses, repayments or accounting timing resulting in belated tax are occupied. 

Suspending penalties:

I f you have made a careless error HMRC may decide not to charge to it immediately. Instead, they may hang the penalty for a period of time if you meet persuaded conditions set to help you reject a future penalty. 

Penalties if you don’t keep enough record for Corporate Tax:

Your company or organization have to keep sufficient business records to allow you to file a compete and exact Company Tax Return.

Penalties on installments payments:

If your company profits for an accounting period are at an annual rate of more than £1.5 million, you must normally pay your Corporation Tax Penalties for that period in installments. 

HMRC may charge penalty if you deliberately fail to make installment payments, or deliberately make installment payments that are too small. Any penalty will be charged only after you have delivered your Company Tax Return (or HMRC has made a determination) and the normal due date has passed. 

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