Our tax preparation specialists tell you everything you need to know about Company Tax Returns

At DSR Tax Claims Ltd, we know that running a company is hard work, and that’s before you have to deal with your Company Tax Return. That’s why our experts want to help make life as easy as possible for you by sharing our specialist knowledge with you. So, whether you are wanting more information about VAT or need to know about charitable tax relief, our handy guides are here to help. All our information is based on HMRC sources, so you can rest assured that these guides are filled with helpful and accurate information.

What is a Company Tax Return

Just like taxpayers are sometimes required by HMRC to complete and send a Self Assessment tax return, detailing all their income and outgoings over a tax year, companies are required to do the same to inform HMRC of their income and expenditure so a tax bill can be calculated.

If your company (or association) receives a ‘notice to deliver a Company Tax Return’ from HMRC, it is legally required to complete and send a Company Tax Return. This is still the case even if your company is loss-making or you have no Corporation Tax to pay.

If you are classed as self-employed as a sole trader or you form part of a partnership, you won’t be required to send a Company Tax Return. You will be expected to send a Self Assessment tax return instead. If this applies to you and you are not yet registered for Self Assessment, do so as soon as possible to avoid receiving a fine or penalty.

What do Company Tax Returns involve?

When you complete a Company Tax Return, you need to work out the following:

  • Any profit or loss for Corporation Tax purposes. This is not the same as the profit or loss that will be detailed in your annual accounts for Companies House.
  • Your Corporation Tax Bill.

You have a choice whether you prepare and file your tax return yourself or employ an accountant to do so on your behalf.

If your company is registered as a limited company with Companies House, you might be able to file your accounts with Companies House at the same time. You would need to have a private limited company which does not require an auditor to be able to do this. If you are filing together, you can either use HMRC’s online service or your own accounting software.

What are the deadlines for submitting your Company Tax Return?

Your tax return is due 12 months after the end of the accounting period it covers. An accounting period can’t be longer than 12 months. It is usually the same as your company’s financial year although it might differ in the year you first set up your company.

If you miss this deadline, you will have to pay a penalty.

The deadline to pay your Corporation Tax is separate to your Company Tax Return deadline. It is usually set as 9 month and 1 day after the end of your accounting period. This means you will pay your Corporation Tax before the Company Tax Return deadline.

What are the penalties for late filing?

These penalties are pretty severe so it is advised that you make sure your Company Tax Return is always submitted on time.

Time after deadline HMRC penalty
1 day £100
3 months A further £100
6 months HMRC will estimate your Corporation Tax bill and will add a penalty of 10% to the unpaid tax
12 months HMRC will add another 10% to your unpaid tax

To make matters worse, if your company is late 3 times with its tax return, the £100 penalties are increased to £500 each time.

When your company’s tax return is more than 6 months late, HMRC will write to you detailing how much Corporation Tax they think you must pay. HMRC refer to this as a ‘tax determination’. You are not allowed to appeal against this. If this happens, you must pay the Corporation Tax due and file your Company Tax Return. HMRC will then recalculate any interest and penalties you must pay.

If you have a reasonable excuse for not filing your Company Tax Return on time, you can appeal against the penalty by writing to the Corporate Tax office assigned to your company. To find out details of the Corporation Tax office you deal with, you can either check any recent correspondence from HMRC or call the Corporation Tax helpline on 0300 200 3410. They are open between 08:00 and 18:00 on Mondays to Fridays.

What does HMRC consider to be a reasonable excuse?

HMRC will consider a reasonable excuse for late filing if you can show you took reasonable care to meet a tax obligation but were prevented from doing so by an event beyond your control. So, reasonable excuses include:

  • If you had a serious or life-threatening illness
  • You had an unexpected hospital stay that stopped you dealing with your company’s tax affairs
  • Your partner or a close relative died shortly before the deadline
  • There were HMRC online service issues
  • You were delayed due to a disability that you have
  • Your computer or software failed just before or during preparation of your online tax return.
  • A fire, flood or theft prevented you from completing your Company Tax Return.
  • There were postal delays which you could not have reasonably predicted.

However, HMRC would expect you to send your tax return or payment as soon as possible once your reasonable excuse has been resolved. It can’t be used as an excuse to delay your tax obligations indefinitely.

HMRC do not consider the following to be reasonable excuses:

  • Your cheque bounced or payment failed because there wasn’t enough money in the account to cover it.
  • You made a mistake in your Company Tax Return
  • You didn’t receive a reminder from HMRC
  • You couldn’t use the HMRC online system because you found it too difficult
  • You relied on someone else to send your Company Tax Return or payment and they failed to do so.

How do you make changes to your Company Tax Return once submitted?

You must make any changes (known as an ‘amendment’ by HMRC) within 12 months of the filing deadline.

To make changes, you can either log into HMRC’s online services to amend your Company Tax Return or make the make the changes through your commercial tax software, if used. If you don’t wish to make your changes online, you can either send a paper tax return or write to your Corporation Tax office.

Do be warned that HMRC may charge a penalty for any amendments and they can also make a compliance check to check for errors in your Company Tax Return.

How can DSR Tax Claims Ltd help?

We know that setting up a new company can be pretty complex – there’s so much to think about and that’s before you start thinking about tax. Our friendly team of tax specialists at DSR Tax Claims Ltd are on hand to help make life easier for you. We’re the experts at identifying your maximum allowable expenses so call us on 0330 122 9972 – we’re the tax experts you can trust.