Corporation tax late payment penalties work differently from late filing penalties: HMRC does not usually fine you for paying late, but it charges daily interest on the unpaid amount from the day after your payment deadline. A separate, fixed penalty applies only if you file the CT600 return late, and the two often get confused.
This matters because directors often assume a single "late corporation tax" fine covers everything. In reality, missing the payment date and missing the filing date trigger two different HMRC processes, with different rules, different amounts, and different ways to reduce the cost.
This article sets out how each charge is calculated, what happens if both the return and the payment are late, and where a director's options sit once the bill starts growing.
Corporation tax late payment penalties vs filing penalties: the key difference
Corporation tax has two separate deadlines. The payment deadline is normally nine months and one day after the end of your accounting period. The filing deadline for the CT600 return is twelve months after the end of the accounting period.
Because these dates fall three months apart, a company can be late on one without being late on the other:
- Late payment — HMRC charges interest on the outstanding tax. There is no fixed fine for paying late, but interest accrues daily and compounds the longer the balance sits unpaid.
- Late filing — HMRC charges a fixed penalty for submitting the CT600 return after the twelve-month deadline, regardless of whether the tax itself has been paid.
A company can therefore owe both: interest for late corporation tax payment, and a separate fixed penalty for a late return. Understanding which charge you are looking at on an HMRC letter is the first step to working out what you actually owe.
Late filing penalties for the CT600 return
If the CT600 return is filed after the twelve-month deadline, HMRC applies a fixed corporation tax filing penalty on a sliding scale:
- 1 day late — £100 penalty.
- 3 months late — a further £100 penalty (£200 total).
- 6 months late — HMRC estimates the tax bill and adds a penalty of 10% of the unpaid tax on top of the fixed fines.
- 12 months late — a further 10% of any unpaid tax is added.
These figures apply to a first late return. As explained below, filing late for three accounting periods in a row increases the fixed penalties significantly. The filing penalty is charged whether or not the tax has been paid, which is why a company can settle its bill promptly and still receive a late CT600 penalty for the paperwork alone.
How HMRC charges interest on unpaid corporation tax
Corporation tax interest from HMRC starts accruing from the day after the normal payment deadline for Corporation Tax — nine months and one day after the end of the accounting period — and continues daily until the balance is cleared, whether or not the return has been filed.
The HMRC interest rates for late and early payments are linked to the Bank of England base rate and are reviewed when the base rate changes, so the CT interest rate moves over time rather than staying fixed. Because it is charged daily on the outstanding balance, the longer a company waits, the larger the interest becomes, and any partial payments reduce the balance interest is calculated on going forward.
Unlike the filing penalty, this interest is not a punishment for a missed deadline in the same sense — it reflects the cost of HMRC effectively lending the company the unpaid tax. It applies even if a Time to Pay arrangement is later agreed, though HMRC will confirm the exact terms as part of that arrangement.
Repeated late filing and escalating penalties
HMRC treats repeated late filing more seriously than a one-off delay. If a company files its CT600 late for three consecutive accounting periods, the fixed penalties increase from £100 to £500 for the first and second late-filing points in that third period.
This escalation is designed to discourage a pattern of late returns rather than an isolated mistake, so a company with a previously clean filing record is treated more leniently than one with a recent history of missed deadlines. Persistent late filing can also prompt closer HMRC scrutiny of a company's wider tax affairs, which is a further reason to treat the filing deadline as a fixed point even when the payment itself needs more time to arrange.
Can you reduce or appeal the charges?
A late filing penalty can sometimes be appealed if there was a reasonable excuse — for example, an unexpected illness, a system failure at HMRC, or another genuine and unforeseeable event that prevented filing on time. Appeals are made directly to HMRC and are assessed case by case; simply forgetting the deadline or lacking funds to pay is not normally accepted as a reasonable excuse for a late return.
Interest on overdue corporation tax is harder to reduce once it has accrued, because it reflects the actual period the tax was outstanding. The most effective way to limit the cost is to act early:
- File the CT600 on time even if the tax cannot be paid in full, to avoid a separate filing penalty stacking on top of interest.
- Pay what you can as soon as possible, since interest is calculated on the reducing balance.
- Contact HMRC promptly if the company cannot pay, rather than waiting for enforcement action to begin.
- Ask about a Time to Pay arrangement, which spreads the outstanding corporation tax over agreed instalments.
Where a company is behind on corporation tax alongside other HMRC debts, or the cash flow problem looks longer-term, it is often worth getting a clearer picture of the options available — see Owe HMRC and Can't Pay? Your Options and Can't Pay Corporation Tax? What to Do for a fuller look at what comes next.
Frequently asked questions
When is corporation tax due for payment?
Corporation tax is normally due nine months and one day after the end of your company's accounting period, which is earlier than the twelve-month deadline for filing the CT600 return.
Does HMRC charge interest from the payment deadline or the filing deadline?
Interest runs from the day after the payment deadline — nine months and one day after the accounting period ends — regardless of when the CT600 return is actually filed.
Is there a fixed fine for paying corporation tax late?
No. Late payment triggers daily interest rather than a fixed fine. The fixed penalties apply to a late CT600 return, not to late payment of the tax itself. For a broader explanation of how this interest is set, see HMRC Late Payment Interest Rate Explained.
What happens if HMRC has estimated my corporation tax bill?
If the CT600 is very overdue, HMRC can issue a "determination" — an estimate of the tax owed — which the company must pay until an accurate return is filed. Filing the actual return is the only way to correct this figure.
Can a company be struck off for unpaid corporation tax?
Persistent non-payment and non-filing can eventually lead to enforcement action, including the risk of the company being struck off or facing formal insolvency proceedings, so it is worth addressing arrears before they escalate.
This article is general information, not legal, financial or insolvency advice, and does not reflect your company's specific circumstances.
If corporation tax arrears are building up alongside other pressures, Harbourfirst can introduce you to a regulated insolvency specialist to talk through the options — start an enquiry.