Corporation Tax Late Payment – Paying Corporation Tax After Due Date

My limited company’s corporation tax return has been filed on time with HMRC but I cannot afford to pay all of the tax by the corporation tax deadline. What are the consequences of corporation tax late payment, will there be a penalty for late payment and should I pro-actively speak to HMRC about my corporation tax payment dates?

corporation tax late payment

Unlike many other taxes there is no actual penalty for not paying corporation tax on time. You will be charged interest (at a current rate of 3% p.a.) which will start to accrue on a daily basis from the first day the corporation tax payment is late.

As with any tax, we recommend letting HMRC know as soon as it becomes apparent that you are going to be unable to pay the full amount owed by the corporation tax deadline.  In our experience HMRC are significantly more likely to show leniency if you talk to them in advance of the due date for the tax bill and, in some instances, will offer arrangements to pay in instalments or defer payment for a time. This may stall them sending your case to their debt collection department.

As a director of a limited company we recommend ring-fencing a level of cash so as to be able to pay your corporation tax when it becomes due.

Many companies choose to do this by opening a separate business reserve account in the company’s name where this money is held – corporation tax late payment will then never be an issue.

Accounting software such as FreeAgent allows you to keep an up-to-date total of any tax that is due. This can be a useful reminder of the corporation tax deadline and help you be more organised when it comes to paying corporation tax.