HMRC set notoriously strict deadlines with regards to filing accounts and making payments, and if you miss deadlines you’ll face penalties.

Small business owners, sole traders or freelancers report to the HMRC, yet there are some extra requirements for Limited companies, which must also report to Companies House.

Your bookkeeper will be aware of the deadlines and penalties, but here is a brief run-down of what you need to know.

 

Deadlines for Self Assessment

HMRC require Self Assessments to be completed by the following:

  • Sole traders
  • Limited company directors and shareholders
  • Members of Limited Liability Partnerships

These are standard deadlines which apply to everyone:

  • Paper tax returns sent by post: 31st October after the end of the prior tax year (5th April).
  • Online tax returns: 31st January after the end of the prior (5th April) tax year.
  • Payment of all Income Tax and National Insurance owed by 31st January after the end of the tax year.

There are two Self Assessment mistakes for which HMRC apply penalties:

  1. Late filing of annual tax returns.
  2. Late payment of Income Tax and National Insurance Contributions reported on the tax return

 

Late Filing of Tax

Regardless of your earnings, if you miss the 31st January self-assessment deadline you will receive a fine of £100. Further delays will also incur the following:

  • 3 months late – a £10 daily penalty for up to 90 days
  • 6 months late – 5% of tax due or £300 (whichever is greater)
  • 12 months late – 5% of tax due or £300 (whichever is greater)

 

Late Payment of Self Assessment Tax Bill

Again, regardless of your earnings, late payment of your self-assessment tax bill will incur the following:

  • 30 days late – 5% of tax due
  • 6 months late – 5% of tax due at that date
  • 12 months – 5% of tax due at that date

Any later than this and HMRC will add an extra 3% interest on your overdue taxes until you completely clear what you owe in full.

 

VAT and Surcharge

Your VAT online account shows your company VAT return and payment date deadlines. The deadlines are on the same day, usually 1 calendar month and seven days following the end of each accounting period, but these can vary so request advice if you are uncertain.

VATIf you miss a filing or VAT payment deadline, you will receive notification from the HMRC stating your owed surcharges. The more you default, the longer you will be subject to surcharges and the higher the surcharges you will be charged.

Again please request advice if you are unsure.

 

Defaults within 12 months:

 

  • Surcharge if annual turnover is below £150,000:
    • 2nd default – No surcharge
    • 3rd default – 2% (no surcharge if this is less than £400)
    • 4th default – 5% (no surcharge if this is less than £400)
    • 6th or more defaults – 15% or £30 (whichever is more)
  • Surcharge if annual turnover is £150,000 or more:
    • 2nd default – 2% (no surcharge if this is less than £400)
    • 3rd default – 5% (no surcharge if this is less than £400)
    • 4th default – 10% or £30 (whichever is more)
    • 5th default – 15% or £30 (whichever is more)
    • 6th or more defaults – 15% or £30 (whichever is more)

 

Corporation Tax

Limited companies must pay Corporation Tax as soon as they make a profit. Late filing of tax returns and annual accounts can result in a Corporation Tax penalty,  which will increase over time:

  • 1 day late – automatic £100 penalty
  • 3 months late – £100 penalty
  • 6 months – 10% penalty added to estimated tax bill
  • 12 months – 10% penalty added to estimated tax bill

If your tax return is late three times in a row, the £100 penalties will increase to £500 each.

The deadline for sending in your tax return and full statutory accounts is 12 months after the end of your company’s accounting period. This may be different to your year end at first if your company was formed mid-month.

 

Late payment of Corporation Tax

The deadline for paying all the Corporation Tax is 9 months and 1 day after the end of your Corporation Tax accounting period. You’ll have to pay ‘late payment interest’ of 3% on any outstanding amounts.

Click here to read our blog about planning for your tax bill.

 

Construction Industry Scheme

For contractors working under the Construction Industry Scheme (CIS), extra penalties will be charged for failing to submit their CIS return by the deadline:

  • 1 day late – automatic £100 penaltyconstruction worker
  • 2 months late – £200 penalty
  • 6 months late – £300 penalty or 5% of CIS deductions (whichever is greater)
  • 12 months late – £300 penalty or 5% of CIS deductions (whichever is greater)

 

Companies House Penalties

Limited companies and Limited Liability Partnerships are also required to report to Companies House as well as HMRC. Companies House also sets deadlines and if these are missed you’ll find yourself paying penalties.

 

Annual Accounts for a Private Limited Company

Depending on your circumstances, accounts can be submitted as full, abridged or dormant, but if this is not done by the deadline you will be charged as follows:

  • No more than 1 month – £150
  • More than 1 month but not more than 3 months – £375
  • 3 months but not more than 6 months late – £750
  • More than 6 months – £1,500

Also, the penalty will automatically double should your accounts be delivered late 2 years in a row!

Here at Freedom in Numbers we provide the full range of business and personal accounting services – from one-off support to ongoing monthly accounting support packages. We’re local and have a wide range of experience helping businesses and individuals just like you, so give us a call if you have any questions on 0114 4000 053

Want to know more?

This was just a brief guide so please speak to an expert when making decisions about your business tax.