A company director who falls behind on corporate tax filings sits at the intersection of two penalty systems and one personal liability regime that most directors do not fully appreciate until it is engaged. The CT600 is late at HMRC. The accounts are usually late at Companies House. The director's loan account may be sitting at a position that triggers Section 455. And in specific circumstances, HMRC can pursue the director personally for the company's tax debts. This guide covers all four exposures and the practical sequence for resolving them.
The good news: the consequences are graduated. There is time to act between the first late-filing notice and any personal liability action. The bad news: the time runs out faster than people expect, and once Companies House initiates strike-off the situation accelerates substantially.
Personal liability is real but narrow
Directors are personally liable for company tax debts only in specific circumstances: wrongful trading, fraudulent preference, deliberate failure to deduct PAYE/CIS, certain VAT positions, and where personal guarantees were given on company borrowing. Routine cash-flow problems do not trigger personal liability. The narrow exceptions exist, are real, and are pursued by HMRC where the facts support them.
The two filing systems directors confuse most often
Limited companies file twice: at HMRC for corporation tax, and at Companies House for statutory accounts. Different deadlines, different penalties, different consequences for missing them.
- 1CT600 (HMRC corporation tax return): due 12 months after the end of the accounting period. Late penalty escalator from £100 flat to 10% of unpaid tax at 6 months and another 10% at 12 months.
- 2Annual accounts (Companies House): due 9 months after the period end. Fixed penalties from £150 to £1,500 for private companies, doubling if the previous year was also late.
- 3Corporation tax payment: due 9 months and 1 day after period end (separately from the CT600 filing). Interest on late payment from the due date.
A director who misses both deadlines for two consecutive years on a company with £40,000 of corporation tax due is looking at: £8,000 of HMRC percentage penalties + £3,000 of Companies House penalties + interest on the unpaid tax. Substantial but recoverable through the right escalation framework.
When Companies House strike-off becomes the immediate issue
Companies House initiates strike-off where accounts remain unfiled for long enough. The notice gives the company a fixed period to file before dissolution proceeds. Once a company is struck off:
- All assets pass to the Crown (bona vacantia).
- Bank accounts are frozen.
- Personal guarantees on company borrowing may crystallise.
- Contracts in the company name become void.
- Reinstating the company requires a court application — expensive and slow.
Strike-off does not eliminate HMRC tax debts. HMRC can pursue directors personally for unpaid tax in specific circumstances even after dissolution. The right response to a strike-off warning notice is to file the accounts before the deadline; the wrong response is to let it proceed.
The director's loan account and Section 455
Where a director-shareholder has taken funds from the company that have not been repaid as salary, dividend, or genuine loan repayment, the balance sits as a director's loan account (DLA) overdrawn. If the DLA is not cleared within 9 months and 1 day of the year end, Section 455 of the Corporation Tax Act 2010 imposes a tax charge on the company at 33.75% of the outstanding balance.
A late CT600 frequently reveals an overdrawn DLA position that has accumulated quietly. The Section 455 charge is recoverable when the loan is eventually repaid (it is a temporary tax), but the cash exposure in the meantime is real.
The "bed and breakfast" rule for DLA repayments
Repaying a director's loan one day and re-borrowing the same amount shortly after does not relieve the Section 455 charge. HMRC anti-avoidance rules treat the round-trip as if no repayment happened. Permanent repayment from genuine income is what relieves the charge.
Time to Pay for company corporation tax
HMRC offers Time to Pay arrangements for companies that cannot settle their corporation tax in full. The standard maximum spread is 12 months for corporation tax (shorter than the 60 months for individuals on Self Assessment), though longer arrangements are negotiable in specific circumstances.
A successful TTP for corporation tax requires presenting a credible cash-flow forecast showing the company's ability to meet the instalments alongside ongoing trading. HMRC pushes back on TTP proposals that look like underfunded restructuring; they accept proposals that show realistic operational sustainability. A specialist who has run multiple corporate TTP negotiations knows the format HMRC accepts.
When the director's personal exposure is real
HMRC has specific powers to pursue directors personally where the facts support it. The most common triggers:
- Personal Liability Notice (PLN) for unpaid PAYE or NIC where there is evidence of fraud or neglect.
- Wrongful trading findings under the Insolvency Act 1986 where the director knew or ought to have known that insolvent liquidation was unavoidable.
- Fraudulent preference where the director arranged payments to favoured creditors ahead of HMRC.
- Director loan repayments out of insolvent funds.
- Personal guarantees signed for company borrowing that crystallise on default.
Where these conditions are not present, limited liability protects the director. The risk is that director behaviour during the company's decline (selective payments, drawing salary while not remitting PAYE, allowing the DLA to grow) is exactly what creates the conditions HMRC pursues. Specialist advice before the company reaches insolvency is materially cheaper than after.
Director facing late CT600 or strike-off? Get specialist help.
A specialist will assess the personal exposure, file the outstanding documents, negotiate the corporation tax position, and where applicable defend against personal liability action. Free initial assessment.