What is a penalty determination?

By Ben Davies · Updated 19 September 2026

A penalty determination is the letter HMRC sends to tell you it has charged a penalty because a Corporation Tax return it asked for did not arrive. It is usually headed "notice of penalty determination" and names the accounting period, the amount, and a reference.

It is automatic

Nobody at HMRC looked at your company before it was issued. The record said a return was due, the return did not arrive, and the penalty followed. That is also why a dormant company receives them: HMRC's record, not the company's actual activity, is what triggers the notice to deliver (its letter asking for a Company Tax Return, form CT603) in the first place.

What it is not

It is not a demand for tax. A determination of tax is a different letter, in which HMRC estimates what it thinks the company owes because no return was filed. A penalty determination is about the missing return itself, and the amount has nothing to do with how much tax is due — which is why a company with no income at all can still be charged.

What it costs

For returns due on or after 1 April 2026: £200 the day after the deadline, another £200 once the return is three months late, then 10% of the unpaid tax at six months and another 10% at twelve. For returns due before that date the two fixed penalties were £100 each. A third consecutive late return pushes them to £1,000 each — or to £500 each where the return fell due before 1 April 2026, because that escalation sits behind the same commencement date as the £200.

For a company with no tax to pay, the percentage penalties come to nothing, so the real exposure is the fixed amounts.

The date that matters

The appeal window is 30 days from the date printed on the notice, not from the day it reached you. That is the single most important thing on the page, and the reason an unwatched registered office costs so much.

What to do with it

File the outstanding return, which stops the escalation. Then decide whether there is anything to argue: for a company that was genuinely outside the charge to Corporation Tax for the period, there is a route, and it is worth taking. Our guide to appealing an HMRC late filing penalty for a dormant company sets out what has to be true and what the letter asks for.