SolvedCOM101025 | Penalties: penalty determinations: full cycle automated penalties
From HM Revenue & Customs · COTAX Manual
Following penalty reform on 01/04/2026 CT211 penalty determination notices are suspended until 18/07/2026
Company Tax Return not received – events and penalties
This example shows the normal sequence of events for a company with a 31 March accounting period and standard filing date. The company does not deliver its return and triggers the full cycle of late-filing penalty charges. (Example dates ignore effect of weekends and public holidays on COTAX processing. Actual dates may vary.)
| Events | Accounting Period (AP) ending 31/03/2021 | Statute | Outputs | Comments |
| Notice to deliver aCompany Tax return | Issued 21/04/2021 | Paragraph (Para) 3 Schedule (Sch) 18 Finance Act (FA) 98 | Form CT603 | The form says:the company's agent will be told that this notice has been issuedif a return for a period which ends later than 31 March 2021 is being delivered later than 31 March 2022 the return must be delivered electronically.penalties are charged if a return (including accompanying documents) are late. |
| Agent list of issued notices to deliver a company tax return | Issued 21/04/2021 | N/A | Form CT603A - issued to agent on same day by the same process (XBT) as issues the CT603 to company | The form provides the agent with a list of client companies to whom HMRC has issued, on the date shown, a Notice to deliver a company tax return (form CT603) |
| Companies must file their return electronically using either HMRC's Corporation Tax Online filing software or HMRC-tested commercial software. | Regulations and Board’s Directionshttp://www.hmrc.gov.uk/thelibrary/ct-online.htm | Online forms CT600 & CT600Guide | The Company Tax Return Guide has this warning at Note 3 - Filing date and penalties -'The penalties for late returns start at £100 and increase up to £1,000 (£200 to £2000 for APs ending after 01/04/2026), plus 20% of any tax paid late for long delays and repeated failures (see Paragraphs 17 to 19 Sch 18 FA 1998).' | |
| 1st payment reminder 28 days before normal due date for payment (9 months and 1 day after AP end date) | Issued 02/12/2021 | N/A | Form CT208 (PR1) | N/A |
| Normal due date for payment of cCorporation tTax | 01/01/2022 | S59D Taxes Management Act (TMA) 1970 | N/A | Late payment interest - under S87A TMA 1970 - runs from this date on late or underpaid tax until it is paid. |
| Events (cont.) | AP ending 31/03/2010 | Statute | Outputs | Comments |
| Combined 2nd payment reminder and return reminder 42 days before filing date (where company has neither paid nor filed) | 18/02/22 | N/A | Form CT208 (PR2) | If a payment or ‘nil’ payslip is returned before this stage, COTAX issues the CT205 Return Reminder only (discontinued from June 2025). The CT208 (PR2) includes these words:“Please remember that we charge penalties for late returns, even if there is no tax to pay. You will incur penalties if the company tax return, including the completed return form and appropriate enclosures, does not reach me by the filing date. The penalties start at £100 and can rise to £1000 (£200 to £2000 for APs ending after 01/04/2026) plus 20% of any tax paid late for prolonged delays and repeated failures. Flat-rate and tax-related penalties may be charged without further warning if the return is late.” |
| Statutory filing date | 31/03/2022 | Para 14 Sch 18 FA 98 | N/A | N/a |
| First flat-rate penalty incurred in law for failing to deliver a company tax return as required by the Notice to deliver | 01/04/2022 | Para 17(2)(a) Sch 18 FA 98 | Penalty is normally £100 increasing to £500 (£200 to £1000 for APs ending after 01/04/2026) for a third or subsequent consecutive failure (under Para 17(3) Sch 18 FA 98). | |
| COTAX enters first flat-rate penalty stage reached signal on company AP record | 01/04/2022 | Para 17(2)(a) Sch 18 FA 98 | No output at this stage. | From 1 April 2022 COTAX checks (at filing date + 1 day) for a return logged on the AP. If none found, penalty processing records the first flat-rate penalty stage reached signal.Please note that: Extra Statutory Concession B46 which gave additional time to file came to an end on 31 March 2022. Customers submitting their Company Tax return after this date must make sure the return is submitted to HMRC by the filing date to avoid penalties. |
| COTAX enters first flat-rate penalty stage charged signal on company AP record.COTAX issues first flat-rate penalty next day | Made 15/04/2022Issued 16/04/2022 | N/A | Form CT211 | COTAX waits a further 14 days (filing date + 15 days) and checks again for a logged return on the AP. (That safeguards against the computer issuing the penalty if we’ve received but not logged a timely return onto COTAX, for example because of no matching AP.)If the return is still outstanding, COTAX records the first flat-rate penalty stage charged signal and issues the penalty next day (filing date + 16 days). |
| Events (cont.) | AP ending 31/03/2021 | Statute | Outputs | Comments |
| COTAX enters second flat-rate penalty stage reached signal on company AP record | 01/07/2022 | Para 17(2)(b) Sch 18 FA 98 | No output at this stage. | COTAX checks (filing date + 3 months + 1 day) but finds no return logged for the AP. Penalty processing therefore records the second flat-rate penalty stage reached signal.Penalty is normally £100. Increased to £500 (£200 to £1000 for APs ending after 01/04/2026) for a third or subsequent consecutive failure (under Para 17(3) Sch 18 FA 98) giving aggregate flat-rate penalties of £200 or £1000 (£400 to £2000 for APs ending after 01/04/2026). |
| COTAX enters second flat-rate penalty stage charged signal entered on company AP record.COTAX issues second flat-rate penalty next day | Made 15/07/2022Issued 16/07/2022 | N/A | Form CT211 | As a safeguard, COTAX waits another 14 days (filing date + 3 months + 15 days) and re-checks for logged return on the AP.If the return is still outstanding, COTAX records the second flat-rate penalty stage charged signal and issues the penalty next day (filing date + 3 months + 16 days). |
| COTAX enters first tax-related penalty stage reached signal onto company record | 01/10/2022 | Para 18(2)(a) Sch 18 FA 98 | No output at this stage. | COTAX checks (at accounting period end date + 18 months + 1 day) but finds no return logged for the AP. Penalty processing therefore records the first tax-related penalty stage reached signal.Penalty is 10% of unpaid tax. ‘Unpaid tax’ is the amount of tax payable by the company for the AP for which the return is required which remains unpaid on the date when the liability to the penalty arises – normally 18 months after the end of the AP. (Para 18(3) Sch 18 FA 98) |
| COTAX enters case on work list DRNR (Determination required No Return) | 07/10/2022 | N/A | No output at this stage | Case awaits review to charge the Revenue Determination of tax payable in the absence of a company tax return. |
| Inspector uses Function RAMA (Record / Amend Assessment) to make a Revenue Determination | Made (say) 14/10/2022Issued 15/10/2022 | N/A | Form CT620 -DET | COTAX processing can now automatically calculate the first tax-related penalty because there is a tax charge present on the AP. Late payment interest can also be calculated on late/unpaid tax. |
| Events (cont.) | AP ending 31/03/2010 | Statute | Outputs | Comments |
| COTAX enters first tax-related penalty stage charged signal onto company recordCOTAX issues first tax-related penalty next day | Made 28/10/2022Issued 29/10/2022 | N/A | Form CT211 | COTAX waits another 14 days (Revenue Determination made date + 14 days) and re-checks the AP for a logged return with a received date prior to the first tax-related penalty point.If the return is still outstanding, COTAX records the first tax-related penalty stage charged signal and issues the penalty next day (Revenue Determination made date + 15 days). |
| COTAX enters second tax-related penalty stage reached signal onto company record | 01/04/2023 | Para 18(2)(b) Sch 18 FA 98 | No output at this stage. | COTAX checks (at accounting period end date + 24 months + 1 day) but finds no return logged for the AP. Batch process WAG therefore records the second tax-related penalty stage reached signal.COTAX automatically calculates the second tax-related penalty based on the tax charge present on the AP record.Penalty is another 10% of unpaid tax as defined in Para 18(3) Sch 18 FA 98, giving an aggregate tax-related penalty of 20%. |
| COTAX enters second tax-related penalty stage charged signal onto company recordCOTAX issues second tax-related penalty next day | Made 15/04/2023Issued 16/04/2023 | N/A | Form CT211 | COTAX waits another 14 days (accounting period end date + 24 months + 15 days) and re-checks AP for a logged return.If the return is still outstanding, COTAX records the second tax-related penalty stage charged signal and issues the penalty next day (accounting period end date + 24 months + 16 days). |
Further points:
Penalty determinations once served cannot be altered except on appeal or in accordance with S118 TMA 70
Penalty determinations can be appealed – S100B TMA 70
Tax-related penalty – if ‘insufficient’, officer may make a determination in the appropriate further amount – S100(5) TMA 70
Tax-related penalty – if ‘excessive’, the determination shall be revised to the correct amount – S100(6) TMA 70
Excuse for delivery of late return / Companies House extension – Para 19 Sch 18 FA 98
Reasonable excuse – S118(2) TMA 1970