COVID-19 can lead to ‘reasonable excuse’ for late corporation tax return
2 December 2020: HMRC has discretion to waive penalties for late filing of corporation tax returns where there is a reasonable excuse. Correspondence with HMRC suggests that this includes delays caused by the late filing of company accounts and other reasons associated with the coronavirus pandemic.
In an email exchange with ICAEW’s Tax Faculty about potential delays to filing a corporation tax return due to COVID-19, HMRC reaffirmed that where a tax return filing date has not yet passed and a company is having difficulty filing its return on time, it can get in touch with HMRC to request deferral of a late filing penalty.
This guidance is in line with existing practice which is set out in HMRC’s Company Taxation Manual at COM130070. This states that when Companies House grants a company further time to deliver its accounts, the company may also be able to deliver its return later than the filing date without incurring a penalty.
A corporation tax return filing is not complete unless it is accompanied by a signed set of company accounts. As a result of the COVID-19 pandemic, Companies House has extended the deadline for filing accounts that were due to be filed sometime between 27 June 2020 and 5 April 2021 (see below).
| Company type | Company has not had an extension or shortened their accounting reference period |
| Public limited companies (PLCs) | Filing deadline extended from 6 to 9 months |
| Private company | Filing deadline extended from 9 to 12 months |
| LLP | Filing deadline extended from 9 to 12 months |
| Overseas companies who are required to prepare and disclose accounts under parent law | Filing deadline extended from 3 to 6 months |
| Societas Europaeas (SEs) | Filing deadline extended from 6 to 9 months |
Due to this extension, some companies may find that they are unable to file their corporation tax returns on time because a signed set of accounts is not available in time.
ICAEW’s Tax Faculty has heard from one member that where the accounts filing has been delayed an informal one-month filing extension for tax return filing would be granted by HMRC where requested. This would need to be applied for within the two weeks before the normal deadline – so between 17 and 31 December 2020 for a limited company with a 31 December 2019 year end.
A return submitted during that one-month filing extension would still be treated as ‘late’ for the purposes of the corporation tax enquiry window rules. However, given that the next quarter end date for this purpose is 31 January 2021 then there should be no major difference to the length of time HMRC will have to open an enquiry.
ICAEW’s Tax Faculty reminds members that where companies have incurred other forms of difficulties in filing their corporation tax returns, which might be a result of the COVID-19 pandemic, they may request a deferral on the basis that they have a ‘reasonable excuse’ for late filing.
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