As a general rule, it’s always best to make sure you’re paying your taxes on time – meeting your deadlines, paying the correct amounts and complying with your tax requirements.
But, occasionally, there will be circumstances where you’ve got behind with your finances, or simply don’t have the available cash flow to settle your tax bill.
Pre-warn HMRC of any late payments
If you find yourself in a situation where you’re likely to miss a tax payment, we’d strongly advise you to tell HM Revenue & Customs (HMRC) this up front, and with plenty of prior warning. By opting for the honest approach, it’s possible to agree a penalty free extension from HMRC.
Call the HMRC payment line on 0300 200 3835 ASAP, if you know you’re going to be late.
The impact of penalties
The impact of any penalties, interest and surcharge will vary depending on how HMRC classify the nature of your late payment.
There are three key categories:
- Non-deliberate – this is where your late payment is accidental; for example, you’ve paid the tax to the wrong bank account number in error.
- Deliberate but not concealed – this is where your payment is late, but you’ve been transparent and open about this with HMRC.
- Deliberate but concealed – this is where you’re attempted to avoid payment and have intentionally kept this hidden; in other words, it’s fraud in the eyes of the law.
‘Non-deliberate’ late payments will attract the smallest penalties and ‘deliberate but concealed’ late payments will result in the biggest fines.
The financial impact will vary depending on the kind of tax you’ve failed to pay, how late you are and how HMRC has classified your late payment. For example, the current penalties for late payment of your corporation tax are as follows:
Type of failure |
Maximum penalty payable |
Non-deliberate |
– 30% of the potential lost revenue |
Deliberate but not concealed |
– 70% of the potential lost revenue |
Deliberate and concealed |
– 100% of the potential lost revenue |
There's a breakdown of the surcharges for late payment of VAT here
Make sure you pay on time
The rule of thumb re payment of your taxes is always:
- Wherever possible, pay on time – and plan your tax costs effectively across the year
- If you can’t pay on time, make HMRC aware and minimise the impact of any penalties
If you need help with a late payment of tax, give us a call on 01454 300 999 or drop an email to info@fd-works.co.uk
Find out more about the FD Works’ approach to finance at fd-works.co.uk