If your company has unpaid Corporation Tax, HMRC starts charging daily interest the day after the payment deadline and can escalate to enforcement agents, frozen bank accounts, and a winding-up petition if the debt is ignored. The practical route out is almost always the same: contact HMRC before enforcement begins and negotiate a Time to Pay arrangement. HMRC would generally rather agree installments with a trading business than shut it down, but that willingness disappears once you stop responding.
When Corporation Tax Was Actually Due
Corporation Tax is due nine months and one day after the end of your company’s accounting period. If the period ends on 31 March, payment is due by 1 January. The Company Tax Return (the CT600) is due twelve months after the period ends, so you owe the money three months before the return is filed.1GOV.UK. Accounts and Tax Returns for Private Limited Companies Directors regularly get caught out by this ordering, assuming they can worry about the tax at the same time as the paperwork. They can’t.
Missing the payment deadline and missing the filing deadline are separate problems with separate consequences, and it’s common to be hit by both at once.
Interest on Late Payment
There is no percentage penalty for paying Corporation Tax late. What HMRC charges is interest, running from the day after the deadline until the balance clears. The rate is set by legislation at the Bank of England base rate plus 4 percentage points.2HM Revenue & Customs. HMRC Interest Rates for Late and Early Payments With the base rate at 3.75%, the late payment rate sits at 7.75% as of early 2026. The rate moves whenever the Bank of England moves, so check GOV.UK for the current figure.
Interest compounds daily. On a £50,000 debt at 7.75%, that’s roughly £10.60 a day. Modest in isolation, but if cash flow is already tight, those daily charges make it harder to catch up the longer you wait.
Late Filing Penalties
Filing the Company Tax Return late is where fixed penalties kick in, on this schedule:3GOV.UK. Company Tax Returns – Penalties for Late Filing
- One day late: £100.
- Three months late: another £100 (£200 total).
- Six months late: HMRC estimates the tax bill and adds a penalty of 10% of the unpaid tax.
- Twelve months late: a further 10% of any unpaid tax.
If your return is late three times in a row, the £100 flat penalties become £500 each. The six- and twelve-month penalties are calculated on HMRC’s own estimate of what you owe, which is rarely favorable to you. Filing on time even when you can’t pay avoids this whole chain.
Setting Up a Time to Pay Arrangement
If you know you can’t meet the deadline, call HMRC before it passes. The Time to Pay (TTP) scheme spreads the debt across monthly installments. Interest continues to accrue on the outstanding balance during the arrangement, but enforcement is held off as long as you keep up with the payments.
What to Have Ready Before You Call
Turning up prepared is the difference between a workable plan and a short conversation. Before phoning, pull together:
- A cash flow forecast covering at least from the current month to three months beyond the proposed end of the payment plan, showing income against outgoings.4GOV.UK. Debt Management and Banking – Time to Pay: Additional Evidence
- A recent letter from your bank confirming your current facilities, including any overdraft or loans, in the name of the company applying.4GOV.UK. Debt Management and Banking – Time to Pay: Additional Evidence
- A breakdown of income and major costs — payroll, rent, utilities, suppliers.
- Your ten-digit Unique Taxpayer Reference (UTR) so the officer can find your account quickly.
- A specific monthly repayment figure you can propose. HMRC will negotiate, but arriving with a number keeps the call focused.
How to Apply
For Corporation Tax, phone HMRC’s payment helpline on 0300 200 3840, Monday to Friday, 8am to 6pm.5GOV.UK. Payment Problems: Enquiries The officer will review your figures and work out a schedule that clears the debt as quickly as your cash flow allows. Written confirmation follows with the installment dates and amounts.
Sticking to the schedule matters. Miss a payment and HMRC can cancel the arrangement and pursue the full outstanding balance. If circumstances change and you genuinely can’t maintain the payments, call again before you default. Renegotiating is possible; going quiet is not.
What HMRC Does If You Ignore the Debt
When a company neither pays nor arranges a plan, HMRC escalates through a series of increasingly aggressive steps.6GOV.UK. What Will Happen if You Do Not Pay Your Tax Bill The first move is often a visit to the business, where an officer looks at the financial situation and tries to agree a settlement or installments on the spot.
If that fails, HMRC can instruct enforcement agents to take control of company goods under the Taking Control of Goods Regulations 2013. You get a notice of enforcement first, giving a minimum notice period before agents can attend.7Legislation.gov.uk. The Taking Control of Goods Regulations 2013 Agents can list vehicles, machinery, and equipment under a controlled goods agreement; if the debt still isn’t paid, those assets are removed and sold at auction. Visit fees, removal costs, and storage all get added to what you owe.
HMRC can also take money directly from your company bank account or offset amounts owed to you, such as a VAT refund, against the Corporation Tax balance. Every one of these steps makes the underlying situation worse, which is why calling early gives you the most room.
Winding-Up Petitions
The most severe step is a winding-up petition, asking the court to shut the company down. Under the Insolvency Act 1986, any creditor owed more than £750 can petition to wind up a company that hasn’t paid.8Legislation.gov.uk. Insolvency Act 1986 – Grounds and Effect of Winding-Up Petition HMRC uses this power regularly for persistent Corporation Tax debts, and the low threshold means even a modest unpaid balance can trigger it.9GOV.UK. Wind Up a Company That Owes You Money
Once the petition is served, banks typically freeze the company’s accounts because they treat the petition as a serious credit event. If the court grants a winding-up order, the company enters compulsory liquidation: a liquidator takes over, sells the assets, distributes the proceeds to creditors, and the company ceases to exist.10GOV.UK. Getting a Winding-Up Order Directors who assume HMRC won’t actually go this far tend to be corrected the hard way.
When Directors Become Personally Liable
A limited company is a separate legal entity, so directors are not usually personally liable for its Corporation Tax. That protection has limits. HMRC can issue a Personal Liability Notice where it believes the company’s failure to pay involved fraud or serious neglect on a director’s part, shifting some or all of the tax onto the individual.
Directors can also face personal exposure for letting the company trade while insolvent, using company money for personal expenses, or failing to keep company and personal finances properly separate. If a liquidator is appointed after a winding-up order, they will examine director conduct in the run-up to insolvency. A wrongful trading finding can result in directors being ordered to contribute personally to the company’s debts.
The pattern is consistent: the earlier you engage with an unpaid Corporation Tax problem, the more of the company you can save, and the less of it sticks to you.
A Note for Large Companies
The nine-months-and-one-day deadline is for most companies. If your taxable profits exceed £1.5 million a year, you’re a “large company” and Corporation Tax is paid in quarterly installments during the accounting period itself, with the first payment due six months and thirteen days after the period begins.11GOV.UK. Pay Corporation Tax if You’re a Large Company Companies with profits above £20 million pay on an even earlier timetable. Missed installments attract the same interest, and HMRC can add penalties where a large company deliberately underpays. If your profits sit near the £1.5 million line, checking which regime applies to you is worth doing before the first installment date, not after.