Mid-sized businesses have been hit by more than £16 million in Corporation Tax penalties from HMRC, according to figures released following a Freedom of Information request.
The data, obtained by law firm BCLP from HMRC’s wealthy and mid-sized business unit, shows a sharp rise in enforcement activity.
The level of fines is now around eight times higher than it was five years ago, with many penalties linked to errors involving R&D tax relief and transfer pricing.
The number of compliance checks has also increased significantly, rising from 2,099 in the 2020–21 tax year to 4,506 in 2024–25.
The unit focuses on businesses with turnover between £10m and £200m and has intensified its scrutiny as the Government seeks to reduce the UK’s £46.8 billion tax gap.
HMRC’s own figures indicate that businesses account for around 60 per cent of unpaid and disputed tax across the system.
The FOI request also highlights growing attention on capital gains realised by companies, which are reported through Corporation Tax returns.
In the 2024–25 tax year alone, £239m of tax was under review. BCLP has suggested this reflects increasing complexity around asset disposals, valuations and the correct application of reliefs.
Corporation Tax is firmly on HMRC’s agenda. For the first time in more than 25 years, the Government is overhauling the late filing penalty regime.
Announced in the 2025 Autumn Budget, the reforms are intended to reflect inflation after penalties remained largely unchanged for decades.
From one April 2026, late filers will face a £200 penalty, rising to £400 if returns are more than three months overdue. Businesses with repeated non-compliance could see penalties increase to as much as £2,000 after three consecutive late filings.
HMRC expects the new regime to raise around £60 million annually and it forms part of wider Budget measures, including the continued freeze on Income Tax thresholds until 2031.
If you are concerned about Corporation Tax compliance or would like advice ahead of your next return, our experienced team is here to help.
