CTM94070 - CTSA: Penalties for late returns: Amount of tax unpaid
Tax unpaid FA98/SCH18/PARA18 (3)
‘Tax unpaid’ for these purposes means:
- the CT chargeable on the profits of the return period (including tax chargeable under CTA10/S455 and, for accounting periods ending on or before 31 December 2012, ICTA88/S747) remaining unpaid on the date when the liability to the penalty arises,
less
- all set-offs in terms of tax, except as shown below.
Example 1
This example shows a tax-related penalty in a straightforward case.
| Company tax return required | Accounting period ended 30 September 2019 |
|---|---|
| Filing date | 30 September 2020 |
| Return filed | 1 May 2021 (more than 18 months after the end of the accounting period) |
| Unpaid tax at 1 April 2021 (30.9.19 + 18 months + 1 day) = | £20,000 |
| Tax-related penalty | £20,000 x 10% = £2,000 |
Example 2
This example shows the tax-related penalty when the notice to deliver is issued late and the return is delivered late. We allow three working days from the date of issue of the notice to deliver for postal delay. The filing date in this case is, therefore, three months and three days after the date when the notice to deliver was issued.
| Company tax return required | Accounting period ended 30 September 2019 |
|---|---|
| Filing date (notice issued Tuesday 27.1.2021) | 1 May 2021 |
| Return filed | 15 May 2021 |
| Unpaid tax at 2 May 2021 (day following the day penalty incurred) | £20,000 |
| Tax related penalty | £20,000 x 10%=£2,000 |
Example 3
This example shows the tax-related penalty when the liability includes a loan to a participator.
| Company tax return required | Accounting period ended 30 September 2019 |
|---|---|
| Filing date | 30 September 2020 |
| Return filed | 1 May 2021 |
| Unpaid tax at 1 April 2021 (filing date + 18 months + 1 day) = | £20,000 |
| Tax-related penalty | £20,000 x 10% = £2,000 |
| Unpaid tax at 1 April 2021 | All relates to a loan made to a participator by a close company |
| Loan all repaid | 1 October 2020 |
You take no account of relief under CTA10/S458. This is because the company receives repayment of the loan more than nine months after the end of the accounting period in which it was loaned. CTA10/S458 (5) defers the giving of relief until the normal due date for the accounting period in which the loan is repaid (1 April 2022). This is after the date on which the penalty is incurred.
If the company receives the loan repayment within 9 months after the end of the accounting period (on or before 30 June 2020) the unpaid tax at 1 April 2021 is NIL. No penalty is then due.
The CT chargeable may not be final for the accounting period when you charge the tax-related penalty. If you revise the amount of CT on which you based a penalty you must also revise or make a further tax-related penalty determination. This will occur, for example, when:
- you have based the penalty on the tax charged in a Revenue determination under FA98/SCH18/PARA36 and the company subsequently delivers a return
- an SA is amended or you issue a further assessment.
For more details see CTM94210.