If you’re an entrepreneur or contractor, running a limited company or register as a sole trader, based in the UK, you need to know about the penalties imposed by Companies House and HMRC and how they could impact your business. By understanding these deadlines, you can plan ahead allowing you to focus on your business.
Whether you are a freelancer, subcontractor or micro business owner, incorporated as a limited company or registered as self-employed, you need to understand the tax and company house thresholds, rates and deadlines – all of which can help make your small business accounting easier and more manageable.
It is crucial that you understand these deadlines, both Companies House and HMRC, will impose on-the-spot penalty fines to small business owners who have missed filing deadlines. You need to understand how this could impact and the costs involved with non-compliance.
Self-Assessment
The self-assessment penalties surround two different experiences of tax filing. This based on late filing and late payment. They have incremental percentile increases attached that can also heap extra costs on late payments.
| Missed Deadline | Penalty | Late Payment | Penalty |
| Missed Original Deadline | £100 | 30 days late | 5% of tax due |
| 3 months late | £10 daily charge for the first 90 days | 6 months late | 5% of tax due from that period |
| 6 months late | 5% of tax due / £300 (depending on which is the greatest sum) | 12 months | 5% of tax due from that period |
| 12 months late | 5% of tax due / £300 (depending on which is the greater sum) |
Value Added Tax
Once an individual or company reaches the VAT threshold, they must register for VAT. This means that you could incur major VAT-related penalties.
| Missed Payments (within 12-month period) | Penalty for companies with an annual turnover of £150,000 or less | Penalties for companies with an annual turnover greater than £150,000 |
| 1 | N/A | N/A |
| 2 | N/A | 2% (0% if less than £400) |
| 3 | 2% (0% if less than £400) | 5% (0% if less than £400) |
| 4 | 5% (0% if less than £400) | 10% or £30 (dependent on whichever is the greatest sum) |
| 5 | 10% or £30 (dependent on whichever is the greatest sum) | 15% or £30 (dependent on whichever is the greatest sum) |
| 6 or more | 15% of £30 (dependent on whichever is the greatest sum | 15% or £30 dependent on whichever is the greatest sum) |
Construction Industry Scheme
The Construction Industry Scheme is a contractor/subcontractor tax deductible scheme that helps to reduce tax avoidance within the UK’s construction industry. The scheme has severe late payments.
| 1 Day Late | £100 penalty |
| 2 Months Late | £200 penalty |
| 6 Months Late | £300 penalty or 5% of CIS deductions (whichever is the greatest) |
| 12 Months Late | £300 penalty or 5% of CIS deductions (whichever is the greatest) |
Corporation Tax
Corporation tax is another HMRC form of taxation that issues both late filing and late payment penalties for companies who abuse the repayment system. The penalties are eye-watering, compliance is crucial.
| 1 Day Late | £100 penalty |
| 3 Months Late | £100 penalty |
| 6 Months Late | 10% penalty on tax bill total |
| 12 Months Late | 10% penalty on tax bill total |
| Late Payment Overdue Payment Charge | 3% penalty |
Companies House Statutory Accounts
Companies House charge penalty fees for late statutory account filing. These penalties can increase. Therefore, understand your statutory account filing deadlines to avoid these penalty payments.
| Late Period | Limited Company Penalties |
| Up to One Month | £150 |
| Up to Three Months | £375 |
| Up to Six Months | £750 |
| More than Six Months | £1,500 |
You need to remember your statutory filing dates for key tax and company house submissions. By planning and keeping note of crucial deadlines you to save both time and money. Why not get in contact with our self-assessment/limited company tax team at Prestige Business Management? Call 0203 773 2927 or alternatively why not email us at info@prestigebm.co.uk for more information?
