Journey
Respond to a Corporation Tax penalty or enquiry
What to do when you receive a Corporation Tax penalty notice or HMRC opens an enquiry. Covers immediate actions, understanding your penalty, appeal rights, Time to Pay arrangements, and when to seek professional help.
You have received a penalty or enquiry notice
Do not panic - but do act quickly. Corporation Tax penalties are common, and most can be resolved. The steps below help you understand what has happened, what you owe, and what you can do about it.
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Understand the penalty type
Corporation Tax penalties typically fall into two categories:
- Late filing penalties: Automatic penalties for filing your CT600 after the deadline (starting at £100, escalating to a percentage of unpaid tax)
- Error penalties: Penalties for inaccuracies in your return, calculated as a percentage of the extra tax due (0-100% depending on behaviour)
Check your penalty notice carefully to identify which type applies and the deadline for any response.
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Check if you have a reasonable excuse
You may be able to appeal a penalty if you had a reasonable excuse. HMRC accepts excuses such as:
- Serious illness or bereavement that prevented you from dealing with tax affairs
- HMRC service failures or system outages near the deadline
- Fire, flood, or theft that destroyed your records
- Postal delays for paper returns (rare for CT600)
A reasonable excuse must have been present throughout the entire period of default. Relying on an accountant is generally not accepted as a reasonable excuse.
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File any outstanding returns immediately
If you have not yet filed, do so as soon as possible. Late filing penalties escalate with time, and an estimated tax assessment at 6 months adds 10% of the unpaid amount.
File your Company Tax Return (CT600)
How to prepare and submit your CT600, including iXBRL requirements.
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Pay what you owe
Interest runs from the day after the payment deadline until the payment date. The sooner you pay, the less interest accrues. If you cannot pay the full amount, contact HMRC to discuss a Time to Pay arrangement before enforcement action begins.
Plan your Corporation Tax payments
Payment methods, late payment interest, and how to set up a Time to Pay arrangement.
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Appeal if you have grounds
You have 30 days from the date of the penalty notice to appeal. You can:
- Appeal online: Through your HMRC business tax account
- Appeal by post: Write to the address on the penalty notice
- Request a statutory review: Ask HMRC to review their decision (a different officer reviews your case)
- Appeal to the Tax Tribunal: If you disagree with the review outcome
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If HMRC has opened an enquiry
An enquiry is different from a penalty. HMRC can open an enquiry into your CT600 within 12 months of filing (or longer if they discover a deliberate error). If you receive an enquiry notice:
- Read it carefully to understand the scope (full enquiry or aspect enquiry)
- Gather all records and documentation requested
- Consider seeking professional tax advice - an enquiry can result in additional tax, penalties, and interest
- Respond within the deadlines stated in the notice
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Prevent future problems
Use the compliance checklist to make sure you stay on track for future accounting periods. Set calendar reminders for payment and filing deadlines.
Corporation Tax annual compliance checklist
Complete year-end checklist to avoid late filing and payment issues.