Regular readers of our articles and guides will know how much we emphasise the importance of meeting your company’s filing obligations. The reason why is simple. By failing to meet the deadlines for your annual accounts and tax return filings you risk large financial penalties. Companies that do not submit their annual filings to Companies House may even face being struck off and directors risk criminal prosecution. In this article we will discuss the potential consequences for a limited company of late filing with HMRC and Companies House.
Your annual filing obligations as a limited company
As a limited company you have several annual filing obligations, as follows:
- Confirmation statement: Your confirmation statement must be filed with Companies House at least once every 12 months and no later than 14 days after the end date of your 12-month review period.
- Annual accounts: Your annual accounts must be filed with Companies House every year. This applies even if your company is dormant. You must file your accounts no later than 9 months after your financial year-end date. If you are filing your first set of accounts then you will have 21 months from your date of incorporation to file them.
- Company Tax Returns and annual accounts: Once your company is registered for Corporation Tax you must ensure that your Company Tax Return and statutory accounts are filed with HMRC. These must be delivered to HMRC no later than 12 months after your Corporation Tax period ends.
- HMRC Self-assessment form: Your self-assessment must be filed with HMRC by the following deadlines:
- Paper tax returns By midnight on 31st October
- Online tax returns By midnight on 31st January
- Pay the tax you owe By midnight on 31st January
In addition to the above filing deadlines, you must ensure that you register for Corporation Tax with HMRC and pay your corporation tax on time. The deadline for registration with HMRC for Corporation Tax is 3 months after you actively begin to trade. The deadline for the payment of corporation tax is 9 months and 1 day after your “accounting period” for Corporation Tax ends.
What are the penalties for late annual filing?
It appears that more and more UK companies are missing their annual filing deadlines each year. Indeed, in the region of 213,000 private companies failed to meet their deadlines between 2019 and 2020. These late filings led to fines in excess of £93 million.
Filing your accounts with Companies House and HMRC is a statutory requirement for all private limited companies in the UK. Failure to meet your annual filing obligations as a limited company can result in fines, being struck off the Companies House register and even criminal prosecution.
All companies are required to meet filing obligations regardless of their type (private or public), size or trading status. If you submit your filings after the deadline then you will receive an automatic penalty. The penalties imposed are as follows:
HMRC penalties for late annual filings
1. Late Self-Assessment filing
The penalties for late filing of self-assessment are as follows:
- Missed deadline: £100 fine – applied automatically as soon as you go over the deadline
- 3 months late: £10 daily penalty for up to 90 days
- 6 months late: 5% of the tax due or £300 – whichever amount is the greater
- 12 months late: 5% of the tax due or £300 – whichever amount is the greater
2. Late Company Tax Return filing
The penalties for late filing of Company Tax Returns are as follows:
- 1 day late: £100 fine
- 3 months late: Another £100
- 6 months late: HMRC will estimate your corporation tax and add a penalty of 10% to the unpaid tax amount – this is called a “tax determination”
- 12 months late: Another 10% of any unpaid tax
Note: If your Company Tax Return is filed late 3 times in a row then the 1-day and 3-month penalties increase from £100 to £500.
Companies House penalties for late annual filings
1. Late filing of annual accounts
If you do not file your accounts and tax return with Companies House on time then you will receive an automatic penalty depending on the time past the deadline:
|Time after the deadline
|Penalty for private limited companies
|Penalty for a public company
|Up to 1 month
|1 to 3 months
|3 to 6 months
|More than 6 months
Note: If you are late in filing your accounts for 2 years in a row then the penalty will be doubled.
Not filing your company accounts on time is also a criminal offence. This means that directors and LLP designated members are at risk of being personally fined in the criminal courts. If criminal action is taken due to not filing your annual accounts then this will be in addition to any late filing penalties that Companies House will levy against your company.
2. Late filing of confirmation statements
Your company’s confirmation statement must be filed with Companies House 1 year either after incorporation or after your last filing. Companies House also provides some leeway, allowing you to file your confirmation statement up to 14 days after the due date. Companies House does not impose automatic fines if a company misses its confirmation statement filing deadline. Your company may, however, be struck off the official register of companies held by Companies House. Furthermore, if no confirmation statement is filed then directors may be held personally liable and face prosecution.
How can I avoid receiving a penalty for late filing?
To avoid a penalty for late filing to HMRC or Companies House it is recommended that you:
- Add a reminder to your calendar to give you an early warning
- Register for e-mail reminders (Companies House will e-mail you to remind you when a filing is due) and
- Ensure that your bookkeeper or accountant prepares your accounts well in advance of the filing deadline.
How can I appeal against a penalty for late filing
Appealing to HMRC
If you receive a penalty for a late filing of your Company Tax Return to HMRC then you may be able to appeal against this if you have a “reasonable excuse”. A reasonable excuse may include the following:
- the death of your partner or a close family member
- a serious or life-threatening illness
- genuine failure of your computer hardware or software
- problems with the HMRC or Companies House online filing service
- a fire, flood or theft
- postal delays
- delays related to a disability or mental illness
- if you were unaware of or misunderstood your legal obligation, or
- if you relied upon someone else, such as an accountant, to send your return and they failed to do so.
It will not be sufficient simply to tell HMRC that you made a mistake or that you did not receive an e-mail reminder.
To appeal, you will need to send a signed letter to HMRC with a full explanation of why your return or payment was late. This must be received no more than 30 days from the date when your penalty was issued.
Appealing to Companies House
To make an appeal you will need to show that you have an exceptional reason. Your appeal may not be successful if:
- your company is dormant
- you cannot afford to pay
- your accountant was ill
- you relied on your accountant
- these are your first accounts
- you are not familiar with the filing requirements
- your company or its directors have financial difficulties (including bankruptcy)
- your accounts were delayed or lost in the post
- the directors or LLP members live (or were travelling) overseas
- another director or LLP member is responsible for preparing the accounts
To appeal against a penalty from Companies House for the late filing of your annual accounts, you will need to complete the online appeal form. You will be asked to provide your company number, penalty reference, the reason for your appeal and any documents that support this. It can then take up to 10 days to receive from Companies House a decision on your appeal. You will not need to pay the penalty until a decision has been made.
The risk of receiving a financial penalty, being struck off, criminal sanctions and reputational damage should be enough to deter all company directors from missing their filing deadlines. By putting in place robust processes and procedures to meet your filing deadlines (including email and calendar reminders), you can ensure such penalties can be avoided.
Uniwide Formations is a professional business service provider based in the UK with expertise in the registration and formation of limited companies and LLPs. We offer a range of services to make sure you meet your filing obligations. For example, by using our Confirmation Statement Service you can be certain that your confirmation statement will be prepared and filed with Companies House on time and, if your company is dormant, then we will ensure that your Dormant company accounts (DCA) are filed by the deadline.