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Late corporation tax return and payment cost £34,870

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The directors of Caris Properties Ltd failed to understand the penalty regime for late filing and late payment of corporation tax and had no reasonable excuse for the delay which affected just one return.

10th Feb 2020
Tax Writer
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Caris Properties Limited (Caris) developed and sold high-end properties. Its accounting period ended 30 September 2016, and the filing deadline for its corporation tax (CT) return for that period was 30 September 2017. The return was filed seven months late, on 1 May 2018.

Caris also paid its 2016 corporation tax liability of £348,705.80 late, which was due on 1 July 2017.

Penalties relating to the late filing of a CT return are currently governed by FA 1998, Sch 18, as the penalty provisions under FA 2009, Sch 55 are not yet in effect for this area.

Where a CT return is filed late, paragraph 17 provides for flat-rate penalties of:

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

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Replies (12)

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By Justin Bryant
10th Feb 2020 10:11

As far as I'm aware (unlike IT) there are no tax geared late CT payment penalties (ignoring interest which is not a penalty rate) and only tax geared CT late filing penalties and assuming that's right the subheading is a bit misleading.

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Replying to Justin Bryant:
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By Dib
10th Feb 2020 13:07

As the penalty requires both a late return and unpaid tax I think the heading makes sense (assuming it has not changed since your post)

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Replying to Dib:
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By Justin Bryant
10th Feb 2020 14:38

But the tax geared penalty was caused by late filing only, so the fact they may have misunderstood late payment did not affect that late filing penalty (unless perhaps they had paid the tax before the late filing penalty kicked in - but that point is not made clear in the above article).

So the heading should perhaps be "Late corporation tax return or payment cost £34,870"

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Replying to Justin Bryant:
Psycho
By Wilson Philips
11th Feb 2020 08:33

The penalty was not caused by late filing only. The late filing may have triggered the penalty but, as you say, if the tax had already been paid there would have been no tax-geared penalty

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By graydjames
10th Feb 2020 10:48

Did Rajani really think that delaying the submission of the return would delay the payment date? I have to doubt it! Perhaps he was thinking that a collector struggles to collect an unknown amount!

I worry though that he felt justified in further delaying submission of the return due to unpaid fees without apparently advising the ex-client accordingly. That would make me feel very exposed!

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By justsotax
10th Feb 2020 12:22

Was the accountant offered the opportunity to provide (or not) evidence showing the basis on which he did not submit the Return, we only seem to have the taxpayer's view, which initially was to hold back the Return - any proof he then advised accountant to issue!?

But what do the Revenue - there only growing business is now penalties....I wonder whether they would be quite as opportunistic if they were billed by accountants/clients for time wasted when dealing with significant Revenue errors...

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By Ian McTernan CTA
10th Feb 2020 12:55

Terrible advice from the accountant (I hope his Institute takes up the case).

Good result for HMRC who were entirely correct in raising a penalty.

Could have easily been avoided as the company had more than sufficient funds to pay at the year end date and should have ring fenced sufficient funds to ensure their obligations were met. Failing that, filing and asking for time to pay would be a better option.

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Replying to Ian McTernan CTA:
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By justsotax
10th Feb 2020 16:27

ah if only he had won the lottery this would have easily been avoided....practically he didn't have the money so 'having sufficient funds' was never an option....

So accountant suggests submitting Tax return on time.....yep appalling advice....

Sorry I realise that in a perfect world you would be correct, but in an imperfect world it seems the accountant was trying to help....perhaps he had experience of the Revenues approach to 'time to pay'.....

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Replying to Ian McTernan CTA:
paddle steamer
By DJKL
11th Feb 2020 12:02

Deleted- re read original post.

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Chris M
By mr. mischief
10th Feb 2020 13:52

I hope this account of what the accountant did was wrong. In the last 3 months I must have filed 10 SA returns and 3 or 4 CT returns, on time, where there are probably not enough funds available to clear the bills in one go. I include a link to TTP for such clients.

For one thing, you can't then be fined for late submission.

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blue sheep
By Nigel Henshaw
10th Feb 2020 20:22

Failing to see what the accountant did wrong here, the fact of the matter is that the filing deadline is 3 months later than the payment deadline so if one has no funds to pay but expects to be able to find said funds within 3 months one is quite within ones rights to not file the return until the deadline and therefore not alert hmrc to the liability and hence delay the nasty letters by at least 3 months. If hmrc do not chase for the payment that is their problem. I am quite sure the accountant would have filed before the deadline had his fees been paid, the question should not be why the return was not filed at the same time as the accounts, but why the hmrc filing deadline is 3 months later.

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By Roland195
11th Feb 2020 10:24

In my experience, had the company in question attempted to obtain time to pay arrangements, this would have firstly required the submission of the return up to three months earlier than it was required to be filed, more indeed if the arrangements were sought before the due date at which point they would be rejected on the grounds the company clearly has plenty of cash to pay it (if we ignore the commitments to their ongoing work which the 30/09/17 suggest the cash went to.

They would therefore be in the situation that HMRC would pursue the debt for those three months with a level of aggression depending on their previous history, phase of the moon & mood of the officer involved. I agree the accountant probably dropped a bigger [***] than he intended by not filing when gone unpaid likely expecting £100 late filing alone - I hope his engagement letter is clear on this part.

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