HMRC penalties are avoidable. At Brightson Accounting, we help businesses across Wolverhampton and the West Midlands avoid the biggest causes: poor organisation and last-minute filing.

Understanding penalty rules helps you avoid costly mistakes.

⚠️ Quick Summary
  • Late filing → £100+ (increases with delay)
  • Late payment → Interest at 7.75%/year + penalties
  • Repeated lateness → Higher penalties
  • Incorrect returns → Penalties up to 100% of tax owed
  • Most penalties are preventable with good systems

Self Assessment Penalties

Late Filing Penalties

How LatePenalty
1 day late£100 fixed penalty
3 months late£100 + £10 per day (max £900)
6 months late£100 + £900 + £300 or 5% tax (whichever higher)
12 months lateAll above + another £300 or 5% tax

Example: File 4 months late with £5,000 tax due:

  • £100 initial penalty
  • £900 daily penalties (£10 x 90 days)
  • Total: £1,000 in penalties alone

Late Payment Penalties

Tax due by 31 January. If you pay late:

  • 30 days late: 5% of unpaid tax
  • 6 months late: Additional 5% of unpaid tax
  • 12 months late: Another 5% of unpaid tax
  • Plus: Interest charged from 31 January (currently 7.75%/year)

Full guide: Self Assessment Compliance: Avoid Costly Errors

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Most UK business owners are overpaying without realising it.

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Corporation Tax Penalties

Late Filing (CT600)

How LatePenalty
1 day late£100
3 months late£200
6+ months late£200 + 10% of tax or £500 (whichever higher)

Late Payment

Corporation Tax due 9 months + 1 day after year-end.

Late payment = interest charged at 7.75%/year (no fixed penalties, just interest).

Full guide: Corporation Tax Compliance Explained

VAT Penalties

Late Filing

VAT returns due 1 month + 7 days after quarter end.

New Points-Based System (from 2023):

  • Each late return = 1 penalty point
  • 4 points (annual filers) or higher (quarterly filers) = £200 penalty
  • Each further late return = another £200
  • Points expire after compliance period

Late Payment

VAT payment also due 1 month + 7 days after quarter.

  • 15 days late: 2% of unpaid VAT
  • 30 days late: Another 2%
  • Plus: Interest on unpaid VAT

Full guide: VAT Compliance: Common Mistakes

Incorrect Return Penalties

If you submit an incorrect return (overestimating expenses, underreporting income), HMRC can charge penalties based on the "behaviour":

BehaviourPenalty Range
Reasonable care takenNo penalty
Careless (genuine mistake)0-30% of tax owed
Deliberate (but not concealed)20-70% of tax owed
Deliberate and concealed30-100% of tax owed

How to Avoid:

  • Keep accurate records
  • Only claim allowable expenses
  • Declare all income
  • Work with a qualified accountant
  • If you discover an error, tell HMRC immediately (reduces penalties)

How to Appeal a Penalty

You can appeal if you have a "reasonable excuse" for missing a deadline:

Valid Reasons:

  • Serious illness or bereavement
  • Unexpected hospital stay
  • Computer or software failure (if reported to HMRC immediately)
  • Fire, flood, or theft of records
  • Postal delays (only if you can prove you posted in time)

NOT Valid:

  • "I forgot"
  • "I was busy"
  • "I didn't know the deadline"
  • Relying on someone else who let you down

How to Appeal:

  1. Write to HMRC within 30 days of receiving the penalty notice
  2. Explain your reasonable excuse with evidence
  3. Pay the tax owed (penalty can be disputed separately)
  4. Wait for HMRC's decision (usually 45 days)

If HMRC rejects your appeal, you can escalate to the Tax Tribunal.

How to Avoid All HMRC Penalties

✅ Penalty Prevention Checklist
  • Set calendar reminders 2 weeks before every deadline
  • Use accounting software with automated deadline alerts
  • File returns early (don't wait until deadline day)
  • Keep accurate digital records year-round
  • Work with an accountant who tracks deadlines for you
  • If you can't file on time, contact HMRC immediately

Full guide: HMRC Deadlines You Cannot Afford to Miss

How Brightson Accounting Can Help

We help businesses across Wolverhampton and the West Midlands avoid penalties by:

  • Tracking all filing and payment deadlines
  • Filing returns on time (we don't miss deadlines)
  • Maintaining accurate records (penalty-proof)
  • Handling HMRC penalty appeals
  • Setting up systems so compliance becomes automatic

Our clients rarely receive penalties — because we handle compliance for them. Want to stay compliant and reduce your corporation tax? Speak to an accountant today.