Corporation Tax Payment Submission Guide

Corporation tax payment and submission guide

At Ellis Lloyd Jones we will do everything in our power to make sure that your corporation tax return is submitted on time and that any tax is paid on time. However, it is important that you understand the basics of submission and payment to avoid any unexpected surprises.

Deadlines for sending in your tax return

Your online corporation tax return must be filed with HMRC by midnight 12 months after your accounting year end. This is the case if your accounts cover a 12 month period or less.

So for a business who has a year-end date of 31 December 2014, the deadline for filing the corporation tax return is midnight on 31 December 2015.

If your accounting period is longer than 12 months, for example if you decide to change your accounting reference date, then you are required to file two corporation tax returns. This is because your taxable accounting period cannot be longer than 12 months. Therefore, you will have to file two accounting periods, one for 12 months and one for the remainder of the period.

So for a business who has a set of accounts that cover an 18 month period covering 1st July 2014 to 31 December 2015, the deadline for filing the corporation tax returns will be as follows;

12 month period ended 30th June 2015 – deadline will be 30th June 2016

6 month period ended 31st December 2015 – deadline will be 31st December 2016.

And if the return goes in late…….

The table below shows the penalties you’ll have to pay if your tax return is late.
Time after deadline Penalty you will have to pay (for private limited companies)
1 day late £100
3 months late Another £100
6 months late HMRC will estimate your company’s tax bill and add a penalty of 10% of the unpaid tax
12 months late Another 10% of any unpaid tax

Please note, if your returns are late 3 times in a row, the £100 penalties are increased to £500 each.

If your Company Tax Return is 6 months late, HMRC will write telling you how much Corporation Tax they think you must pay. This is called a ‘tax determination’. You can’t appeal against it.

You can appeal to HMRC against a late filing penalty if you have a ‘reasonable excuse’. If you have a reasonable excuse, you can appeal against a penalty by writing to your company’s Corporation Tax office.

Paying your corporation tax

The quickest and safest way to pay your tax is online at HMRC’s website. You will need your 17 digit payment reference to do this. You can locate this from the payment slip that HMRC will have posted to you, alternatively if you give us a call, we can provide this reference to you. This reference is very important as it ensures the payment is recorded against the correct tax and the correct period.

If you prefer you can pay your tax using the following methods which are outlined on HMRC’s website:

Direct Debit

Bank details for Faster Payments by online/telephone banking or CHAPS

Paying at your bank by Bank Giro

At the Post Office

Deadlines for paying your tax

You must pay any tax you owe within 9 months and 1 day of your accounting period end.

For example, for a year ended 31st December 2014 you must pay any tax you owe by 1st October 2015.

It is therefore very important that we obtain your accounting records within a reasonable time frame so that we can prepare and finalise your financial statements and calculate the potential corporation tax liability in time for this deadline.

If you have taxable profits of more than £1.5 million you must pay your corporation tax in instalments.

And if you don’t pay your tax on time……

Interest charges if you pay late

You will have to pay interest on anything you owe and haven’t paid, including any unpaid penalties, until HMRC receives your payment.

Find out the latest interest rates on late payments

Any late payment interest you pay to HMRC is tax deductible for Corporation Tax purposes. This means you can include this expense in your company accounts for the accounting period (or periods) when the interest was incurred.

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