Tax Compliance for Growing UK Businesses: What You Need to Know

As your business grows, so do your tax obligations. What starts as a simple self-assessment return for a sole trader can become a complex web of Corporation Tax, VAT, PAYE, Companies House filings, and Making Tax Digital requirements – all with their own deadlines and penalties. This guide sets out the key UK tax compliance obligations by stage of growth, so you know what applies to you and what the consequences are for missing deadlines.

Stage 1: Starting Out – Corporation Tax Registration

If you operate as a limited company, you must register for Corporation Tax with HMRC within three months of starting to trade. If you are unfamiliar with how Corporation Tax works as a whole, including how taxable profits are calculated and what rates apply, our complete guide to Corporation Tax is a useful starting point before working through your compliance obligations. You do not need to wait for your first accounts to be filed – registration is required at the point you begin business activity.

Once registered, your company will file an annual CT600 Corporation Tax return. The key deadlines are:

Understanding what your annual return must include, from declaring profits to submitting supporting documentation, is essential from the moment you register. Read our guide on what filing a company tax return actually involves.

• Corporation Tax payment: due nine months and one day after the end of the accounting period
• CT600 return: due 12 months after the end of the accounting period
• Late payment penalty: Interest accrues from the payment deadline at HMRC’s current rate. A late CT600 carries an initial £100 penalty, rising to £200 after three months, then percentage-based penalties for continued delay.

For a full breakdown of every Corporation Tax date your company needs to plan around, including variations for different accounting periods, read our dedicated guide on key CT deadlines.

Stage 2: VAT Registration

VAT registration becomes compulsory once your taxable turnover exceeds £90,000 in any rolling 12-month period (2025-26 threshold – this has been frozen since 2024). You must register within 30 days of the date you first exceed the threshold.

Once registered, you must:

• Charge VAT on your taxable supplies at the correct rate (20% standard, 5% reduced, 0% zero-rated, or exempt depending on the goods or services)
• File VAT returns – typically quarterly – under Making Tax Digital (MTD) for VAT using compatible software
• Pay any VAT due on the date your return is filed (or by direct debit)

MTD for VAT applies to all VAT-registered businesses. You must use HMRC-compatible software to keep digital records and submit returns directly. There is no paper alternative.

Voluntary registration: You can register for VAT voluntarily below the threshold – useful if your customers are mainly VAT-registered businesses, as you can reclaim input tax on your costs.

Stage 3: Employing Staff – PAYE and RTI

When you hire your first employee (or begin paying yourself a salary as a director), you must register as an employer with HMRC and operate PAYE. This involves:

• Deducting income tax and employee National Insurance from employees’ wages
• Paying employer National Insurance (15% on earnings above £5,000 per year from April 2025)
• Filing Full Payment Submissions (FPS) to HMRC on or before each payday under Real Time Information (RTI)
• Paying PAYE and NIC to HMRC by the 19th of the following month (or 22nd by electronic payment)

Failure to file RTI on time attracts automatic penalties. HMRC also expects you to file an Employer Payment Summary (EPS) in months where no payments are made, to confirm you have nothing to pay.

Stage 4: Companies House Obligations

All limited companies must file with Companies House annually, regardless of their level of activity. Key obligations include:

It is also worth understanding how your annual accounts feed directly into your Corporation Tax position. Read our guide on how company accounts and Corporation Tax connect to ensure both filings are prepared consistently and without gaps.

Filing	Deadline	Penalty for Late Filing
Confirmation statement	Within 14 days of the review date (annually)	Criminal offence – company can be struck off
Annual accounts	9 months after year-end (private companies)	From £150 up to £1,500+; doubled for two consecutive years
Change of directors/registered address	Within 14 days of the change	Civil penalty

For a full explanation of how these penalties are structured, how they escalate over time, and what steps you can take to avoid them, read our guide on late filing penalties for company accounts.

Stage 5: Making Tax Digital for Income Tax

Making Tax Digital for Income Tax (MTD for ITSA) is being phased in for unincorporated businesses and landlords:

• From April 2026: self-employed individuals and landlords with income over £50,000 must use MTD-compatible software and file quarterly updates to HMRC
• From April 2027: the threshold drops to £30,000
• From April 2028: further expansion anticipated

Under MTD for ITSA, instead of one annual self-assessment return, affected individuals must submit four quarterly updates and a final declaration. This is a significant operational change that requires early preparation – particularly around software and bookkeeping processes.

Stage 6: IR35 and Off-Payroll Working

If your company engages contractors or consultants through their own personal service companies, the off-payroll working rules (commonly called IR35) may apply. Since April 2021, medium and large private sector businesses are responsible for determining whether a contractor’s engagement falls inside or outside IR35.

If a contractor’s role is determined to be inside IR35 (i.e., they would be an employee if engaged directly), the fee-payer must deduct income tax and NIC from the contractor’s fees. Getting this wrong carries significant PAYE liability for the engaging company.

Key Penalties Summary

Obligation	Penalty for Non-Compliance
CT600 not filed on time	£100 immediately; £200 after 3 months; further tax-geared penalties
VAT return late or unpaid	Surcharge regime; late payment interest from day one
RTI not filed on time	Automatic penalty per month based on number of employees
Accounts not filed (Companies House)	£150 rising to £1,500; doubled for second consecutive failure
VAT registration missed	Backdated VAT liability on all sales since registration should have applied
IR35 incorrect determination	Company liable for income tax and NIC as if employee

If you are unsure how to make your Corporation Tax payment correctly, including which reference to use and how to confirm HMRC has received it, read our step-by-step guide on paying your Corporation Tax bill.

Staying Compliant as You Scale

The most effective approach to tax compliance is a proactive calendar – knowing your deadlines before they arrive. Good accounting software (Xero, QuickBooks, Sage or equivalent) will handle MTD filings, payroll RTI, and VAT returns automatically. But the decisions around structure, VAT scheme choice, IR35 determinations, and R&D claims require professional judgement.

In particular, having an accountant review your tax return before submission can prevent costly mistakes that trigger HMRC enquiries. Read our guide on how an accountant protects your tax return from errors.

Many penalties arise not from deliberate non-compliance but from growing businesses not knowing when a new obligation has been triggered. The safest approach is to speak to your accountant before you cross a threshold, not after.

This is particularly relevant for businesses with overseas elements or UK property interests, where registration requirements go beyond the standard process. Read our guide on Corporation Tax registration for offshore property developers to understand what additional obligations may apply.

Speak to an Accountant About Multi-Tax Obligations

At Cigma Accounting, we help businesses across London deal with increasingly complex tax compliance requirements so they can stay organised and avoid costly errors. From Farringdon, including London Bridge Fringe and Finsbury Circus, many companies face challenges across corporation tax, VAT, payroll, and reporting obligations, which is why our support focuses on bringing clarity and structure to ongoing compliance.

As tax rules continue to evolve, businesses need more than just year-end support—they need a consistent approach to compliance throughout the year. With physical offices across London, we help companies stay on top of their obligations, reduce risk, and ensure all submissions are accurate, timely, and fully aligned with HMRC requirements.