{"id":6324,"date":"2025-04-22T11:11:51","date_gmt":"2025-04-22T10:11:51","guid":{"rendered":"https:\/\/www.bainesjewitt.co.uk\/blog\/?p=6324"},"modified":"2025-04-22T14:10:26","modified_gmt":"2025-04-22T14:10:26","slug":"an-overview-of-filing-and-payment-penalties-for-businesses","status":"publish","type":"post","link":"https:\/\/www.bainesjewitt.co.uk\/blog\/an-overview-of-filing-and-payment-penalties-for-businesses\/","title":{"rendered":"An overview of filing and payment penalties for businesses"},"content":{"rendered":"

Across the major taxes, HM Revenue & Customs (HMRC) issues penalties when tax is not filed or paid on time.<\/p>\n

<\/p>\n

The specific rules vary by tax type, but late submission or payment will cost you.<\/span>\u00a0<\/span><\/p>\n

Let\u2019s look at what has changed, particularly under Making Tax Digital (MTD) for VAT and MTD for Income Tax, and then recap the penalties across other key taxes.<\/span>\u00a0<\/span><\/p>\n

Making Tax Digital \u2013 New late-payment regime from April 2025<\/span><\/b>\u00a0<\/span><\/h3>\n

The Spring Statement confirmed increased penalties for late payment of VAT and Income Tax as MTD rolls out more widely.<\/span>\u00a0<\/span><\/p>\n

Once a payment is between 16-30 days late, the penalty is now three per cent on the outstanding tax owed at day 15, an increase from one per cent.\u00a0<\/span>\u00a0<\/span><\/p>\n

For payments 31 days late or more, a further three per cent penalty is added to the initial penalty of three per cent.\u00a0<\/span>\u00a0<\/span><\/p>\n

Late payments falling in this bracket also mean a daily penalty of 10 per cent per annum, an increase of six per cent.\u00a0<\/span>\u00a0<\/span><\/p>\n

Late-payment penalties will apply to amounts due following assessments or amendments, and balancing payments, but not to payments on account.<\/span>\u00a0<\/span><\/p>\n

From 6 April 2026, taxpayers with qualifying income above \u00a350,000 who are mandated into MTD for Income Tax will fall under a points-based penalty regime, similar to the one already in place for MTD VAT.<\/span>\u00a0<\/span><\/p>\n

Key elements of the MTD for Income Tax penalty regime<\/span><\/b>\u00a0<\/span><\/h3>\n
    \n
  • One late submission allowed without penalty in a 24-month period.<\/span>\u00a0<\/span><\/li>\n<\/ul>\n
      \n
    • One penalty point per late quarterly return.<\/span>\u00a0<\/span><\/li>\n<\/ul>\n
        \n
      • When the points threshold is reached (usually two points), a \u00a3200 penalty is charged.<\/span>\u00a0<\/span><\/li>\n<\/ul>\n
          \n
        • Further \u00a3200 penalties apply for each subsequent late submission until the taxpayer completes a period of compliance.<\/span>\u00a0<\/span><\/li>\n<\/ul>\n
            \n
          • To reset points to zero, you must make eight consecutive quarterly returns on time.<\/span>\u00a0<\/span><\/li>\n<\/ul>\n

            Penalty points for MTD VAT and MTD IT will be calculated separately.<\/span>\u00a0<\/span><\/p>\n

            During the public beta testing period, taxpayers who voluntarily join MTD IT will not receive late-filing penalties if they miss quarterly update deadlines.<\/span>\u00a0<\/span><\/p>\n

            Corporation Tax<\/span><\/b>\u00a0<\/span><\/h3>\n

            For Corporation Tax, penalties apply as follows:<\/span>\u00a0<\/span><\/p>\n

              \n
            • One day late \u2013 \u00a3100 penalty.<\/span>\u00a0<\/span><\/li>\n<\/ul>\n
                \n
              • Three months late \u2013 Additional \u00a3100.<\/span>\u00a0<\/span><\/li>\n<\/ul>\n
                  \n
                • Six months late \u2013 HMRC estimates your bill and charges 10 per cent of the unpaid tax.<\/span>\u00a0<\/span><\/li>\n<\/ul>\n
                    \n
                  • Twelve months late \u2013 A further 10 per cent penalty.<\/span>\u00a0<\/span><\/li>\n<\/ul>\n

                    Persistent late filers (three late submissions in a row) will be charged \u00a3500 for each late submission instead of \u00a3100.<\/span>\u00a0<\/span><\/p>\n

                    VAT (non-MTD registered)<\/span><\/b>\u00a0<\/span><\/h3>\n

                    For businesses not under MTD for VAT, penalties are calculated based on a points-based model.\u00a0<\/span>\u00a0<\/span><\/p>\n

                    You must file each VAT Return by the deadline for your accounting period, usually monthly, quarterly, or annually.<\/span>\u00a0<\/span><\/p>\n

                      \n
                    • You receive one penalty point for each late submission.<\/span>\u00a0<\/span><\/li>\n<\/ul>\n
                        \n
                      • Once you reach a penalty point threshold, you are issued a \u00a3200 financial penalty.<\/span>\u00a0<\/span><\/li>\n<\/ul>\n
                          \n
                        • You will continue to receive a \u00a3200 penalty for each subsequent late submission while at the threshold.<\/span>\u00a0<\/span><\/li>\n<\/ul>\n
                            \n
                          • The penalty point threshold varies depending on your accounting frequency:<\/span>\u00a0<\/span><\/li>\n<\/ul>\n
                              \n
                            • Annual \u2013 Two points<\/span>\u00a0<\/span><\/li>\n<\/ul>\n
                                \n
                              • Quarterly \u2013 Four points<\/span>\u00a0<\/span><\/li>\n<\/ul>\n
                                  \n
                                • Monthly \u2013 Five points<\/span>\u00a0<\/span><\/li>\n<\/ul>\n

                                  If you correct your compliance and submit all returns on time for a set period (depending on your accounting frequency), your points will reset to zero.<\/span>\u00a0<\/span><\/p>\n

                                  Capital Gains Tax<\/span><\/b>\u00a0<\/span><\/h3>\n

                                  The reporting and payment deadline for Capital Gains Tax on residential property disposals is 60 days. Penalties for late filing are:<\/span>\u00a0<\/span><\/p>\n

                                    \n
                                  • \u00a3100 fixed penalty after the deadline.<\/span>\u00a0<\/span><\/li>\n<\/ul>\n
                                      \n
                                    • Additional penalties for continued delay:<\/span>\u00a0<\/span><\/li>\n<\/ul>\n
                                        \n
                                      • \u00a3300 or five per cent of the tax due (whichever is higher) after six months.<\/span>\u00a0<\/span><\/li>\n<\/ul>\n
                                          \n
                                        • A further \u00a3300 or five per cent after twelve months.<\/span>\u00a0<\/span><\/li>\n<\/ul>\n

                                          HMRC is ramping up enforcement as it continues the digital transformation of the tax system. Businesses should prioritise:<\/span>\u00a0<\/span><\/p>\n

                                            \n
                                          • Timely submission and payment of all taxes.<\/span>\u00a0<\/span><\/li>\n<\/ul>\n
                                              \n
                                            • Embracing digital record-keeping under MTD.<\/span>\u00a0<\/span><\/li>\n<\/ul>\n
                                                \n
                                              • Using reliable accounting software and advisors to track deadlines.<\/span>\u00a0<\/span><\/li>\n<\/ul>\n

                                                Avoiding penalties will help you remain in HMRC\u2019s good books and keep your business finances in order.<\/span>\u00a0<\/span><\/p>\n

                                                If you are unsure about any of these submission and payment penalties and would like more information, our team is here to help. Contact us today.\u00a0\u00a0<\/span><\/b>\u00a0<\/span><\/p>\n","protected":false},"excerpt":{"rendered":"

                                                Across the major taxes, HM Revenue & Customs (HMRC) issues penalties when tax is not filed or paid on time.<\/p>\n","protected":false},"author":2,"featured_media":6327,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[24,125],"tags":[],"_links":{"self":[{"href":"https:\/\/www.bainesjewitt.co.uk\/blog\/wp-json\/wp\/v2\/posts\/6324"}],"collection":[{"href":"https:\/\/www.bainesjewitt.co.uk\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.bainesjewitt.co.uk\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.bainesjewitt.co.uk\/blog\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.bainesjewitt.co.uk\/blog\/wp-json\/wp\/v2\/comments?post=6324"}],"version-history":[{"count":2,"href":"https:\/\/www.bainesjewitt.co.uk\/blog\/wp-json\/wp\/v2\/posts\/6324\/revisions"}],"predecessor-version":[{"id":6329,"href":"https:\/\/www.bainesjewitt.co.uk\/blog\/wp-json\/wp\/v2\/posts\/6324\/revisions\/6329"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.bainesjewitt.co.uk\/blog\/wp-json\/wp\/v2\/media\/6327"}],"wp:attachment":[{"href":"https:\/\/www.bainesjewitt.co.uk\/blog\/wp-json\/wp\/v2\/media?parent=6324"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.bainesjewitt.co.uk\/blog\/wp-json\/wp\/v2\/categories?post=6324"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.bainesjewitt.co.uk\/blog\/wp-json\/wp\/v2\/tags?post=6324"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}