Paying corporation tax late can ruin the smooth operation of your business. Unlike other types of taxes:
- corporate taxes have no “surcharge notice” or “grace period”
- penalties begin to accrue immediately after the due date has passed.
Cash flow issues may sometime affect your ability to pay corporation tax on time. The worst action you can take is to ignore to address the issue on time. Here at The Insolvency Experts, we have helped many businesses and individuals to find an arrangement to pay corporation tax.
We have a highly skilled and certified team of financial experts with vast expertise and experience in dealing with HMRC. If you are currently unable to pay corporation tax, get in touch with us to help overcome the effects of corporate tax late payment penalties.
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4 Key Questions on paying corporation tax late
What are the legal deadlines for corporation tax?
Even if you can’t pay corporation tax on time, you still need to know the two key rules that determine when your corporate taxes fall due. First, if your company has profits of in excess £1.5 million, you will have to pay your corporation taxes on a short deadline, but you may be allowed to settle your taxes in four installments. If you choose to settle your taxes through installments, you need to come up with a practical financial plan to ensure each payment is made on time.
Any company with taxable profits not exceeding £1.5 million has 9 months plus 24 hours after the expiry of the accounting period to settle their corporation tax. Paying corporation tax late is always subject to penalties, whether due in installments or as a lump sum.
What are corporation tax late payment penalties?
If you submit your corporation tax returns late, there are a range of penalties. The submission deadline falls one year after the expiry of the accounting period. For instance, if you are returning for April 1, 2017 to March 31, 2018, the HMRC due date will fall on March 31, 2019.
Your company’s Corporation Tax Return should incorporate details of your company’s turnover for the accounting period, as well as, the profits before tax, adjustments, as well as, any other tax due to HMRC. The HMRC charges 3% p.a for any late payment. Late submission is subject to the following penalties:
Number of Days Charges
Late for 12 months A penalty of 10% will be added to your estimate tax returns
Late for 6 months A penalty of 10% will be added to your estimate tax returns
Late for 3 months A penalty of £100 will be added to your estimate tax bill
1-day late A penalty of £100 will be added to your estimate tax bill
What are the alternatives if you can’t pay corporation tax on time?
Developing a habit of setting aside your Corporation Tax returns throughout the year is one that can put you at real risk of late submissions. Settling Corporation Tax should be a top priority while settling liabilities, before even thinking about setting aside the Directors’ dividends or loans. If you are unable to pay your corporate tax on time, you need to call HMRC and inform them that you may not be able to meet your tax liability as and when it falls due.
Failure to inform HMRC on time may force you to deal with bailiffs. If you are unable to pay corporation tax and do not have the confidence to negotiate with HMRC, you can speak to The Insolvency Experts and we will help with expert and personable financial advice.
Our financial specialists have been working in close collaboration with HMRC for many years. Therefore, they have the expertise and experience to help you agree on a favourable “time to pay” plan with HMRC. We can try to negotiate for a suitable arrangement based around the underlying business situation and the main reasons why the company is not able to settle the taxes currently. Always try to work out a payment plan with HMRC to avoid penalties whenever possible.
If you suspect that you may pay your corporation tax late, consider consulting insolvency specialists first before contacting HMRC. Our financial experts and lawyers can advise on how your taxable profits will impact on determining the ideal duration to settle your tax debt. Once we do a thorough evaluation of your cash flow prediction, we will help you to negotiate a comfortable payment arrangement with HMRC.
Who can you contact if you’re unable to pay corporation tax?
Paying corporation tax late has serious financial implications to your business. However, you may be unable to pay your corporation tax on time due to cash flow problems. If you suspect that you can’t pay corporation tax on time, contact The Insolvency Experts for timely and specialised financial advice. We have helped many clients in the UK to avoid further corporation tax late payment penalties.
You may plan for financing to avoid the implications of paying your corporation tax late. For example, you may be able to use your debtors’ book or assets to secure a loan, especially when you can’t pay corporation tax for one reason or another, including cash flow issues.
Confidential invoice discounting and invoice factoring are also some of the alternatives that help many businesses to avoid corporation tax late payment penalties. Other options include small business loans and trade financing. Working with our experts will help you to boost your operating capital to meet your tax liabilities easily.
Here at The Insolvency Experts, we are always ready to provide our clients with expert and specialised advice when faced with late tax payment issues. Last minute rush may subject your company to a serious financial problem. Our experts ensure your business is on the right track and advise you on how to ensure you meet your tax obligations on time. You can contact us by phone or email, with details on our Contact page.