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HMRC internal manual

COTAX Manual

From
HM Revenue & Customs
Updated
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Penalties: late delivery of returns: tax-related penalties

This subject is presented as follows.

General
 
Tax unpaid
S963 CTA 2010 (formerly S102 FA 1989) surrenders
Amendment to CT chargeable

General

If a company fails to deliver its return within 18 months after the end of the AP it is potentially liable to a penalty.

The penalties chargeable are:

  • ten per cent of the tax unpaid at the 18 month point or, if later, the filing date (Word 42KB), if the company delivers its return within two years of the end of the AP
  • 20 per cent of the tax unpaid at the 18 month point or, if later, the filing date, if the company delivers its return later than two years after the end of the AP.

The filing date may exceptionally fall after the 18 month point when:

  • the notice to deliver is issued late or
  • there is a short AP at the beginning of a long period of account.

In such cases the company incurs no tax-related penalty providing it delivers its return by the filing date.

Tax unpaid

Tax unpaid is the amount of tax payable by the company for the AP for which the return was required remaining unpaid on the date when the liability to the penalty arises under legislation.

Exceptionally, if the filing date for the return is more than 18 months after the end of the AP, the penalty is based upon the tax unpaid at that later date.

In arriving at the amount of tax payable, you do not allow any deferred relief due under the provisions of S458 CTA 2010, relief in respect of repayment of loan.

S963 CTA 2010 (formerly S102 FA 1989) surrenders

S963 CTA 2010 allows the surrender of a tax refund from one group company to another. For more information see COM120000 onwards.

To calculate tax unpaid for the purpose of a tax-related penalty, the recipient company is treated as having paid the amount of the refund on the day the two companies jointly gave notice to the caseworker under S963 CTA 2010 not as having paid the tax on the date when the tax was paid by the surrendering company.

If the notice of surrender is given after the 18 month point, tax-related penalties must be based on the tax unpaid on the date when the liability to the penalty arises.

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Amendment to CT chargeable

The final CT charge may not have been established for the AP when the tax-related penalty is charged. If the amount of the CT charge on which a tax-related penalty has been based is subsequently amended, COTAX automatically recalculates and issues an amended determination.

See:

  • COM101000, COM102000 and COM140000 for more information
  • COM100013 for legislation applying to this subject.