What Happens If You Don't File a Company Tax Return

If you fail to file a Company Tax Return after receiving a notice from HMRC, they won't just wait indefinitely. HMRC has the power to estimate how much Corporation Tax your company owes and issue a bill for that amount — a process known as making a "determination". You'll face penalties for late filing and be required to pay the estimated tax immediately, with interest backdated to your original payment deadline.

What is a determination?

A determination (sometimes called a revenue determination) is HMRC's official estimate of how much Corporation Tax your company owes when you haven't filed your Company Tax Return. It effectively replaces the tax calculation you should have submitted yourself.

When HMRC issues a determination, it carries the same legal weight as if you'd calculated the tax yourself — meaning you must pay it.

When HMRC will issue a determination

Your Company Tax Return filing deadline is normally 12 months after the end of your Corporation Tax accounting period. If you miss this deadline, HMRC can legally issue a determination.

In practice, HMRC will normally wait at least six months after your filing deadline before issuing a determination, giving you time to submit your return. However, once 18 months have passed since the end of your accounting period without a return being filed, you can expect HMRC to take action.

How HMRC calculates what you owe

HMRC makes what they call a "best estimate" of your Corporation Tax liability based on the information available to them. They don't simply guess — they use known facts about your company to calculate a figure "to the best of their information and belief".

The determination may be based on:

• Your company's profits (which they may estimate from previous years' returns, Companies House accounts, or industry benchmarks)
• Losses carried forward from earlier accounting periods
• The applicable Corporation Tax rate or rates for your accounting period

It's important to understand that HMRC's estimate could be higher than what you actually owe, as they're working with incomplete information. They have no way of knowing about allowable expenses, reliefs, or losses you might be entitled to claim.

Payment deadlines and interest charges

Once HMRC issues a determination, you must pay the full amount immediately — regardless of when your normal Corporation Tax payment deadline would have been.

Your normal Corporation Tax payment deadline is usually nine months after the end of your accounting period (though this varies for very large companies with substantial profits).

Even though the determination may arrive much later, HMRC will charge interest on the unpaid tax backdated to your original payment deadline. This means you'll owe interest for the entire period since your tax should have been paid, not just from when the determination was issued.

Consequences of not paying

If you don't pay the determination amount, HMRC will pursue collection of the debt. This can include:

• Enforcement action to recover the money
• Further interest charges accumulating on the unpaid amount
• Potential insolvency proceedings if the debt remains unpaid

HMRC will continue pursuing the debt until either you pay it in full or you file your outstanding Company Tax Return (which replaces the determination with your actual self-assessment).

How to challenge a determination

You cannot formally appeal against a determination in the way you might appeal other HMRC decisions. The determination isn't meant to be a precise calculation — it's an estimate made because you failed to provide the required information.

However, you can replace (or "displace") the determination by filing your outstanding Company Tax Return. When you do this, your own calculation of Corporation Tax owed replaces HMRC's estimate.

You should file your return as soon as possible to:

• Replace HMRC's estimate with your actual figures
• Stop additional interest accumulating on any overstated amount
• Avoid further collection action

Once you've filed, you'll need to pay the Corporation Tax you've calculated in your return. If this amount is lower than the determination, the excess you've already paid can be refunded or offset. If it's higher, you'll need to pay the difference.

Remember that you'll still face penalties for filing your return late, separate from the determination itself. These penalties increase the longer you delay filing.

The importance of filing on time

The determination process demonstrates why filing your Company Tax Return on time matters — even if you can't pay the tax immediately. By filing, you:

• Avoid HMRC making potentially inflated estimates
• Prevent interest backdating to your original payment deadline
• Maintain control over your tax calculation
• Can arrange a payment plan based on the actual amount owed

If you're struggling to complete your return by the deadline, contact HMRC or speak to your accountant before the deadline passes. Late filing always creates more problems than it solves.

Sources

• Determinations: if you don't file a Company Tax Return

This article provides general guidance based on current HMRC rules. For advice specific to your situation, speak to your accountant.