Guidance

Corporation Tax: penalty determinations - (CT211 Notes)

Updated 6 June 2018

Overview

HMRC will issue a penalty determination using form CT211 when their records show that your company has failed to deliver its return, or returns, by the required date.

Penalties for late returns start at a flat rate of £100 and can increase to £1,000 plus tax-related penalties of up to 20% of any unpaid tax. If you’ve received a determination you must act now and deliver the returns to avoid further penalties.

If your company has a professional adviser or agent, show them the penalty determination as soon as possible. HMRC will have sent a copy to your agent if you’ve authorised them to do so.

What these notes cover

These notes give some general information about the enclosed penalty determination. They explain:

• your obligation to deliver a return by the filing date
• the penalties HMRC charge if you do not file on time
• how to appeal if you do not agree with the penalty
• how to pay
• what to do now to avoid further penalties
• where you can find more information and help

The notes are not a complete guide to the law.

The law applying to Corporation Tax Self Assessment (CTSA) return periods ended on or after 1 July 1999 is at Schedule18 and 19 Finance Act 1998. Different legislation, the Taxes Management Act 1970, applies to Corporation Tax Pay and File (CTPF) return periods ended on or after 1 October 1993 and before 1 July 1999.

Your penalty determination shows which legislation applies, depending on the return period end date. These notes do not give a full description of the CTSA regime. More information about Corporation Tax is available, or you can contact HMRC at the address or telephone number shown in your penalty determination.

1. The filing obligation

Your company must file a return or returns if HMRC issue a CT603 Notice to deliver a Company Tax Return.

You normally have to file a return for an accounting period, but you will sometimes have to make one for a period during which the company was dormant. This can happen when a company starts trading sometime after it was incorporated.

The return usually consists of all of the following:

• a completed Company Tax Return form CT600, the online equivalent of this, or an approved substitute version
• accounts, as described in the notice to deliver
• computations showing how the figures on the return form have been arrived at from the accounts

For CTSA return periods, you may also have to complete and include one or more return form supplementary pages. The return must be delivered to the officer who issued the notice to deliver by the filing date, which is the later of:

• 12 months from the end of the period for which the return is made
• 3 months from the date on which the notice to deliver was served
• 12 months from the end of the company’s relevant period of account, if it is not longer than 18 months
• 30 months from the start of the company’s relevant period of account, if its longer than 18 months

You can find more information about these and other points in the CT600 Guide.

2. Flat-rate penalties

Your company is liable to a flat-rate penalty if its required to deliver a Company Tax Return and fails to do so by the filing date. The penalty is:

• £100 - if the return is delivered within three months after the filing date
• £200 - in any other case

Increased rates apply (of £500 and £1000 respectively) if your company repeatedly fails to deliver returns by the filing date.

Where returns for three or more consecutive accounting periods are delivered late, and your company was liable to penalties for the first two of those periods, the flat-rate penalty for the third and each successive late return is charged at the appropriate increased rate.

Your company is not liable to a flat-rate penalty if both of the following are met:

• the period for which the Company Tax Return is required is one for which the company is required to deliver accounts under the Companies Act
• the return is delivered no later than the last day for the delivery of those accounts to the registrar of companies

3. Tax-related penalties

In addition to any flat-rate penalty, your company is also liable to a tax-related penalty if it is required to deliver a Company Tax Return and fails to do so within 18 months after the end of its accounting period (or by the filing date if its later than that). The penalty is calculated as follows:

• 10% of the unpaid tax where a return is delivered within two years of the end of the period covered by the return
• 20% of the unpaid tax in any other case

For return periods ended on or after 1 July 1999, the ‘unpaid tax’ means the amount of tax payable by the company for the accounting period for which the return was required, which remains unpaid 18 months after the end of the accounting period or at the filing date if it is later.

For return periods ended before 1 July 1999, the ‘unpaid tax’ means the amount of tax payable by the company for the accounting period for which the return was required, which remains unpaid 18 months after the end of the accounting period.

4. Appeals

You can appeal if you think that the amount shown on the penalty determination is excessive or not due. You should:

• write to the HMRC address on the penalty determination within 30 days after the date of issue of the penalty determination
• say why you think the penalty determination is wrong
• quote the reference and period shown on the penalty determination

If you think that your company has a reasonable excuse for not delivering its return by the filing date, tell HMRC what it is. They will try to settle any appeal by agreement with you.

If you cannot reach agreement you can have your appeal reviewed by someone not previously involved. You can ask HMRC to arrange a review or they can offer you one at any stage during the discussion of your appeal. Once the review is complete, HMRC will write and tell you the outcome and explain the decision.

Whether or not you choose to have a review, you will also have the right to appeal to an independent tribunal. To do this you must contact the Tribunals Service within 30 days of the penalty determination or within 30 days of the letter telling you the conclusions of HMRC’s review.

If you ask HMRC to carry out a review or accept their offer of a review you cannot appeal to the tribunal while the review is ongoing.

5. Payment

Unless you appeal, the amount charged on the penalty determination is due and payable in full, 30 days after the date of issue of the penalty determination. Payment to HMRC may be made by a variety of methods. Instructions can also be found in the letter which accompanied your penalty determination.

6. Further penalties

Your company must deliver a return, or returns, of its profits, losses and other information required for the purposes of the Corporation Tax Acts for the period specified on the notice. You must act now. Further penalties may be charged automatically if you fail to deliver the outstanding return, or returns, including any accompanying documents.

7. Further information and help

Most companies and agents must file accounts and Company Tax Return online.

More information is available about completing and delivering your Company Tax Return.

If you are exempt from online filing you can download paper copies of the CT600, CT600 Guide or any of the supplementary pages needed.