Corporation Tax

3. Payment

Companies are responsible for assessing their own liability to corporation tax and for ensuring that all the money which is due is paid on time.

3.1 Most companies have to pay corporation tax within nine months and one day of the end of their accounting period.

• This rule applies to small and medium-sized companies (ie those with profits of up to £1.5 million).
• Tax must be paid in full at the due date, whether or not HM Revenue & Customs (HMRC) is challenging the figures shown on the return (see 3.3).
• Interest is charged on late payments.

3.2 Larger companies have to pay the tax due in quarterly instalments.

• The first instalment has to be paid six months and 14 days after the end of the preceding accounting period (ie halfway through the accounting period to which the payments relate).
• Two further quarterly payments then have to be made with the balance payable within three months and 14 days of the end of the accounting period.

3.3 All companies have to notify HMRC of their profits by submitting their corporation tax return.

• The corporation tax return must be made within 12 months of the end of the accounting period. There are penalties for failing to file on time.
• If HMRC disputes any of the figures shown on the corporation tax return, the company may face an enquiry or a demand for extra tax. The Inspector normally has 12 months from the filing deadline to make enquiries into a return.