It is imperative for all small business and freelancer/contractor in the United Kingdom to be on top of the tax filing deadline, along with different tax rates and thresholds. Both, small businesses working as a limited company or sole trader, must keep track of the filing deadlines made compulsory by HMRC to avoid Companies House Late Filing Penalties or fines based on the degree of delay. Sometimes, it can be difficult for business owners to keep track of the accounting guidelines and tax filing deadlines.
To avoid companies house late filing penalties & payments small businesses can hire small business accountants to take care of the accounting and taxation needs of the business. Doing so will help business owners to focus more on business strategy and maximizing wealth.
Each year by 31 January you should submit your yearly self assessment tax return and pay any tax that you owe for the preceding tax year.
As issued by the HMRC, there are two categories of self assessment penalties. One for late filing penalties and the other is for late payment of payable tax. Both add up over times.
|Deadline missed||£100 penalty|
|Overdue by 3 months||Upto 90 days, daily £10 penalty|
|Overdue by 6 months||Greater of 5% of tax due or £300|
|Overdue by 12 months||Greater of 5% of tax due or £300|
If the HMRC believes that the taxpayer is deliberately withholding information or evading tax, additional penalties may apply.
|Overdue by 30 days||5% of tax due|
|Overdue by 180 days||5% of tax due on that date|
|Overdue by 12 months||5% of tax due at that date|
HMRC could issue surcharges and penalties in VAT registered business. HMRC record a ‘default’ in the below cases:
If multiple returns are missed, HMRC issues strict penalties for Value added tax (VAT) registered businesses.
|Payments missed within 12 months||Fine when annual revenue is less than £150,000||Fine when annual revenue is equal to £150,000 or greater|
|1||No penalty||No penalty|
|2||No penalty||2% or no penalty if less than £400|
|3||2% or no penalty if less than £400||5% or no penalty if less than £400|
|4||5% or no penalty if less than £400||Greater of 10% or £30|
|5||Greater of 10% or £30||Greater of 15% or £30|
|6 or more||Greater of 15% or £30||Greater of 15% or £30|
Corporation Tax penalties, as with self assessment, are issued for late payment and late filing, and increase with time.
|Late by 1 day||Penalty of £100|
|Late by 3 months||Penalty of £100|
|Late by 6 months||Penalty of 10% added to estimated tax bill|
|Late by 12 months||Penalty of 10% added to estimated tax bill|
|Every overdue payment||Penalty of 3%|
When you’ll become late in returning tax three times in a row, the amount of £100 penalties could increase to £500 each.
When your tax return is six months late, HMRC will write you after telling about how much you should pay for the Corporation tax. This process is known as ‘tax determination’. You’re not allowed to make any appeal against it. You should pay the Corporation tax due and file your tax return. HMRC will recalculate the interest and penalties that you’re required to pay.
Construction Industry Scheme (CIS)
Contractor who works under the CIS, could face penalties if miss the date for CIS return.
Contractors and freelancers, working under CIS, will have to pay penalties if filing deadlines are missed.
|Late by 1 day||Penalty of £100|
|Late by 2 months||Penalty of £200|
|Late by 6 months||Greater of £300 penalty or 5% of CIS deductions|
|Late by 12 months||Greater of £300 penalty or 5% of CIS deductions|
|For limited company|
|Till 1 month||£150|
|Till 3 months||£375|
|Till 6 months||£750|
|Greater than 6 months||£1,500|
To perk up the percentage of companies filing their accounts, the Companies House late filing penalties were set up in 1992. This was done to get company accounts details into the public sphere of influence after the accounting period ended. The idea behind this move was to get information in the public domain which would be beneficial for customers, suppliers, and shareholders. The suppliers / customers can easily figure out how safe it will be to trade with the company.
The penalties are used under the Companies Act, but made obligatory all the way through the criminal court system. The Companies House aims to target Directors of companies which without fail file their accounts or yearly returns late. Directors can be individually fined upto £5,000, and for a continuous violation of the code they can be fined £500 a day. Also, a director may face personal accountability of claims on the basis of the breach of their duty towards the company.
There are circumstances when a company Director can be considered for disqualification. If a director or all the directors at a company, who file annual returns, receive three (3) convictions for delayed filing of accounts or returns, then according to the Company Directors Disqualification Act 1986 they can be referred to the Magistrates (courts) for disqualification. The penalties for late filing can be considerable. For private companies it can be £1,500, and for public companies £7,500. Penalties can be two times if returns are late in two consecutive financial years. Delayed filing of accounts can also lead to credit being reserved or credit period being tightened
Companies’ house usually sends the late filing penalties notice to the company registered office address. In case, the company wants to seek any clarification, they can contact the Companies House at 0303 1234 500. The company’s registered, in Wales and England, and Northern Ireland, can even pay by cheque:
For companies registered in Scotland, the address is:
It is the legal accountability of company’s director to make certain that accounts are prepared and submitted to the Companies House before the deadline. The company can even appeal at the Companies House. Every appeal that reaches the Companies House is different. When making an allowance for an appeal against a penalty a case manager should be fair, self-governing, and having the ability to analyze and reach to a correct decision. Personal biasness should not influence the decision making.
DNS Accountants is a trusted brand and has years of knowledge in the accounting and taxation domain. The firm has been helping businesses with Companies House Late filing penalties and also making sure that companies don’t delay their filing henceforth. The team of Accountants at DNS comprises of learned taxation professionals and ACA’s or Chartered Accountants (CA). The firm focuses a lot of customer service & believes in delivering unmatched client service. DNS Accountants offers:
Get the best advice on tax savings, accounting services, payroll, self assessment, VAT and more, whether you want to call us directly, request a call back or chat online with our experts, rest assured that we will always give you the best advice.If you have any questions, or would like to speak to us in person, please do get in touch. We're here to help.
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Harrow, Middlesex, HA3 8DP
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