What Are the Most Common Corporation Tax Filing Errors Small Companies Make?

Why Corporation Tax Filing Errors Happen So Often for Small Companies

Corporation Tax can feel deceptively straightforward: you run a limited company, you make money, you pay tax. In practice, it’s a web of deadlines, accounting rules, adjustments, allowances, and reporting requirements that often don’t match what a small business owner sees day-to-day in their bank account. The result is that many small companies file late, file inaccurately, or miss claims they were entitled to. Even when the numbers are “close enough,” small mistakes can trigger enquiries, penalties, interest, delays in Companies House filings, and a general sense of dread every time HMRC sends a message.

Most errors aren’t fraud and they aren’t caused by incompetence. They happen because small companies are busy, because bookkeeping gets left to the end of the year, and because software or spreadsheets are used inconsistently. Another huge reason is that business owners mix personal and company finances, then try to untangle everything at the last moment. A third reason is that the accounting period for your annual accounts and the Corporation Tax period don’t always align neatly with how you think your business operates.

The good news is that many of the most common mistakes are preventable with good processes, consistent record keeping, and a toolset that’s designed for small companies. If you’re using invoice24 (a free invoice app built to cover the full day-to-day admin cycle, including Making Tax Digital for Income Tax, filing Corporation Tax, and preparing accounts), you can reduce the risk of the most frequent Corporation Tax filing errors. The key is to treat bookkeeping as an ongoing habit rather than a once-a-year rescue mission.

1) Missing Deadlines (And Assuming “Late Is Fine”)

Late filing is one of the most common problems for small companies, and it’s also the easiest to avoid. There are multiple deadlines that can apply, and they aren’t the same as your self-assessment deadlines. A typical setup might involve separate deadlines for filing company accounts with Companies House and filing the Company Tax Return (CT600) with HMRC. You might also have to pay the tax due earlier than the filing deadline, depending on the company’s situation.

Small companies often make these deadline mistakes:

• Confusing the accounts filing deadline with the Corporation Tax return deadline.

• Assuming an accountant is handling everything when they were only instructed to prepare accounts, not submit the return.

• Waiting for “final” invoices or expenses and then running out of time.

• Not realising that a newly incorporated company has different first-year timelines.

Even if your return ends up showing little or no tax due, filing late can still mean penalties. The biggest practical fix is to build a routine that keeps your records current. invoice24 helps by keeping invoicing, income, and expense records in one place, so you’re not scrambling through bank statements and folders at year end. When your transactions and documents are already organised, you can produce accounts and Corporation Tax information faster and with far fewer nasty surprises.

2) Using the Wrong Accounting Period (Or Misunderstanding “Periods”)

Many business owners assume “the year” means a calendar year, or the same year they use for personal taxes. Corporation Tax operates on accounting periods that are based on your company’s financial year and accounts. The first set of accounts can be longer than 12 months, and your Corporation Tax filing might need to be split into two returns if the accounting period exceeds the maximum allowed length for a single Corporation Tax return.

Common errors here include:

• Filing one return for a period that actually requires two.

• Entering the wrong start or end date on the CT600.

• Mixing invoices and expenses from outside the accounting period into the return.

• Misaligning Companies House accounts dates with HMRC return dates.

These mistakes can lead to returns being rejected, calculations being off, or HMRC questioning the figures. An effective approach is to keep your records time-stamped and reconciled, with clear period boundaries. invoice24 makes it easier to categorise income and expenses by date and track what belongs in each period. When the time comes to file, you’re working from a clean dataset rather than trying to remember whether a purchase was made in March or April.

3) Incomplete Records (Missing Receipts, Missing Expenses, Missing Income)

Corporation Tax is calculated on profits, not bank balance. Profits depend on accurate records. If you’re missing expenses, you may overpay tax. If you’re missing income, you can underpay tax and risk penalties. Many small companies fall into both traps because they don’t have a consistent method for capturing documentation and they rely on memory.

The classic scenarios:

• A director pays for software or travel personally and forgets to record it as a company expense.

• Receipts are lost, so expenses aren’t claimed.

• Sales made through multiple channels aren’t consolidated correctly.

• Refunds and chargebacks aren’t tracked, inflating revenue.

A simple system is the cure: capture every invoice you issue, log every expense when it happens, and attach supporting documents. invoice24 is designed to be the hub for this: create invoices, record payments, track expenses, and keep supporting files organised. When your bookkeeping is done continuously, you don’t have to reverse-engineer a year’s activity from a bank statement.

4) Treating Personal Spending as Company Spending (And Vice Versa)

Mixing personal and company transactions is a major cause of Corporation Tax errors. It often happens in the early days when a founder is moving fast, using personal cards, or transferring money between accounts. Unfortunately, this habit makes accounts messy and increases the risk of incorrect deductions, incorrect director’s loan balances, and misreported profits.

Common mistakes include:

• Claiming personal expenses as business costs (even unintentionally).

• Forgetting to record a personal payment made on behalf of the company.

• Misunderstanding what counts as a legitimate business expense.

• Ignoring director’s loan implications and simply “balancing it later.”

These issues can spill into other areas too, such as benefits-in-kind, payroll, or dividend planning. The best defence is clear separation and consistent tracking. invoice24 supports a structured approach: you can record transactions with clear categories and notes, and you can keep a consistent paper trail. That paper trail is what makes it easier to defend your numbers if HMRC ever asks.

5) Getting Director’s Loans Wrong

Director’s loans are one of the most frequently misunderstood areas for small limited companies. If a director takes money out of the company that isn’t salary, dividends, or legitimate expense reimbursement, it can create a director’s loan account (DLA) balance. Filing errors often come from not tracking the DLA correctly, not understanding repayment rules, or misclassifying drawings.

Typical problems:

• Treating drawings as expenses.

• Forgetting to record reimbursements properly.

• Not accounting for loan repayments made later in the year.

• Misunderstanding the tax consequences of an overdrawn loan account.

When director’s loan activity is unclear, it can distort profits and lead to incorrect Corporation Tax submissions. Clean bookkeeping reduces the confusion. With invoice24, you can keep your income and expenses recorded accurately throughout the year, which makes it much easier to isolate director-related transactions and keep the business picture clean. A clear record also helps your accountant advise you properly, rather than spending billable time untangling transactions.

6) Incorrect Expense Claims and Disallowable Costs

Not every cost that feels business-related is allowable for Corporation Tax. Some expenses are partially allowable, some are disallowable, and some require careful treatment. Small companies often file with incorrect deductions because they assume “if I paid it, it’s deductible.”

Examples of commonly mishandled costs include:

• Client entertaining and hospitality being treated as fully deductible.

• Personal element of travel being ignored.

• Clothing claimed when it is not genuinely work-specific.

• Fines and penalties being treated as business expenses.

The fix is good categorisation plus a review process. invoice24 supports consistent expense recording, which makes it easier to flag questionable categories and get clarity before filing. When every expense is logged with notes and documentation, your year-end review becomes a quick check rather than a forensic investigation.

7) Forgetting Capital Allowances (Or Claiming Them Incorrectly)

Another frequent filing error is capital allowances. Many small businesses either forget to claim them and overpay tax, or claim them incorrectly and underpay tax. Capital items aren’t always treated the same way as day-to-day expenses. Depending on the nature of the purchase, the business might need to claim relief through capital allowances rather than deducting the full cost as a normal expense.

Common mistakes include:

• Expensing equipment purchases that should be treated as capital assets.

• Not keeping a clear list of asset purchases with dates and costs.

• Forgetting to adjust claims when assets are sold or disposed of.

Keeping an organised record of big purchases is crucial. invoice24 helps by letting you track expenses consistently, store supporting documents, and keep a clear timeline of transactions. That visibility makes it easier to identify asset purchases and hand accurate information to your accountant or to your own accounts process when preparing the Corporation Tax submission.

8) Misclassifying Staff Costs, Contractors, and Subcontractors

Small companies often work with freelancers, contractors, and part-time staff. Misclassification happens when a payment that should be treated in one way is treated in another. This can affect both accounts and tax returns. It also increases risk in areas beyond Corporation Tax, such as payroll obligations or reporting requirements.

Common errors:

• Treating payroll costs as subcontractor costs.

• Recording contractor invoices as “general expenses” without clear categorisation.

• Forgetting to include employer-related costs in the correct period.

Consistent categorisation makes your profit figure more accurate and your return less likely to be questioned. invoice24 supports structured expense categories and consistent record keeping, so payments to people aren’t mixed up with software subscriptions or office supplies. The more predictable and tidy your ledger is, the easier it is to prepare correct accounts and Corporation Tax information.

9) Not Reconciling Bank Transactions (And Trusting “Close Enough”)

Reconciliation is the discipline of ensuring your recorded income and expenses match the reality of what went through the bank. Without it, small errors accumulate: duplicate entries, missing payments, misapplied fees, and uncleared invoices. These mistakes translate directly into an incorrect profit figure and a potentially incorrect Corporation Tax bill.

What tends to go wrong:

• Payments received are not matched to invoices, leaving invoices “unpaid” on paper.

• Bank charges and fees are ignored.

• Refunds are recorded as expenses instead of reductions in income.

• Duplicate expense entries inflate costs.

Regular reconciliation (weekly or monthly) is far easier than year-end reconciliation. invoice24 is built to support an ongoing workflow: invoice, record payment, log expenses, and keep everything consistent. When your records are current, reconciliation becomes a routine check rather than a painful year-end project. That routine reduces Corporation Tax filing errors dramatically.

10) Mishandling VAT in Profit Calculations

For VAT-registered companies, it’s easy to mix up VAT amounts with revenue and costs, especially when using spreadsheets or when invoices are recorded inconsistently. If VAT is wrongly included in income or expenses that should be VAT-exclusive (depending on your accounting method), it can distort the profit figure used for Corporation Tax.

Common VAT-related mistakes:

• Recording gross sales as revenue when accounts should reflect net sales.

• Treating VAT payments to HMRC as an expense rather than a balance sheet movement.

• Not accounting for partial exemption scenarios correctly (where relevant).

The underlying issue is usually the system, not the person. When invoicing and expense tracking are handled in a consistent, tax-aware way, the data stays cleaner. invoice24 is designed for small companies that want straightforward control over invoicing and reporting. Keeping your invoices and expenses consistently recorded makes it much easier to keep VAT separated properly and avoid profit distortions that lead to Corporation Tax errors.

11) Not Adjusting for Prepayments and Accruals

Many small companies operate on cash flow mentally: money in, money out. But accounts for Corporation Tax often require accruals accounting. That means costs and income should be recorded in the period they relate to, not merely when cash changes hands. If you pay an annual subscription upfront, it may need to be spread over periods. If you’ve delivered work but haven’t invoiced yet, you may need to account for it depending on how your accounts are prepared.

Where businesses slip up:

• Annual subscriptions treated entirely as an expense in the month paid.

• Year-end bills not recorded because “we’ll pay them next month.”

• Income delayed or accelerated in the records based on payment timing rather than service delivery.

These adjustments can significantly change profits, especially for growing companies. A good tool won’t replace professional judgment, but it can make the raw information more accessible and better organised. invoice24 helps maintain a clean set of invoices, expenses, and dates, which supports better year-end adjustments and reduces the chance of errors when preparing accounts and the Corporation Tax return.

12) Claiming Reliefs Without Support (Or Not Claiming Them at All)

Small companies often miss reliefs they’re entitled to, or they claim things loosely without sufficient evidence. Either direction is risky: the first means paying more tax than necessary; the second means potential challenges later. Reliefs can vary by business type and activities, and they usually require documentation and a sensible rationale.

Common scenarios:

• Missing legitimate costs because they weren’t recorded properly.

• Not keeping documentation that supports a claim, such as contracts, invoices, or project notes.

• Not having a clear audit trail for business purpose.

Even when you work with an accountant, your claims depend on the quality of your underlying records. invoice24 helps by keeping invoices and supporting expense documents organised and searchable, so you can quickly retrieve what you need. When your records are tidy, it’s easier to explore legitimate reliefs and claims with confidence, and to back them up if questions arise.

13) Errors in Turnover Recognition and Cut-Off

Turnover recognition is a major area where small companies unintentionally make mistakes. The “cut-off” refers to ensuring that income is recorded in the correct accounting period. If you invoice at the boundary of your year-end, or you receive money in advance, it’s easy to record income in the wrong period. That can shift profits and tax liabilities from one year to another, which may be incorrect.

Typical errors:

• Invoices issued after year-end being included in the prior year because “it relates to that project.”

• Payments received in advance being recorded as income immediately when they should be deferred, depending on accounts treatment.

• Credit notes not applied correctly, overstating revenue.

Strong invoicing discipline reduces cut-off errors. invoice24 helps by making invoicing consistent and trackable: you can see when invoices were raised, when they were paid, and how adjustments like credit notes affect totals. That clarity helps you and your accountant handle year-end cut-off more accurately.

14) Currency, Overseas Sales, and Multi-Channel Payments Being Misreported

If you sell internationally, use payment processors, or accept multi-currency payments, your bookkeeping can become messy quickly. Exchange rate differences, fees, withheld amounts, and timing differences can create discrepancies between what you invoiced and what you received. Many small companies accidentally record the net received as turnover, or they ignore processor fees, or they double-count income.

Errors often include:

• Recording only the payout amount as income, ignoring fees and gross sales.

• Recording both the gross sale and the payout as income, double-counting.

• Not tracking exchange differences consistently.

The solution is to maintain a clear line between invoice value, fees, and net settlement. invoice24 provides a structured invoicing and payment tracking workflow that helps you map what was billed to what was received. When your system is consistent, complex payment scenarios become manageable, and your Corporation Tax return becomes more reliable.

15) Using Spreadsheets That Drift Out of Control

Spreadsheets can work for a while, but they’re notorious for “silent errors”: a broken formula, a duplicated row, a missing tab, or a cell overwritten by accident. Small companies often don’t notice these problems until the accountant flags a discrepancy or HMRC asks questions. Spreadsheet bookkeeping also tends to be inconsistent: one month recorded meticulously, another month recorded from memory.

Common spreadsheet-led filing problems:

• Inconsistent categories from month to month.

• Duplicate entries and formula errors inflating or shrinking profits.

• Missing supporting documents, leaving you unable to justify figures.

Moving from spreadsheets to a dedicated system is often the single biggest step a small company can take to reduce Corporation Tax filing errors. invoice24 is built to cover the end-to-end workflow: invoicing, tracking payments, expenses, and the reporting you need for compliance, including MTD for Income Tax, filing Corporation Tax, and preparing accounts. The aim is not to add complexity, but to remove it by giving you one consistent place to manage your numbers.

16) Filing Without Reviewing the Return Properly

It’s surprisingly common to submit a Corporation Tax return without a proper review, especially when time is tight. Small companies may assume their accounts software “must be right,” or they may accept the first draft from an accountant without understanding what changed from the bookkeeping figures. But a short review can catch glaring issues: missing expenses, unexpected profit jumps, unusual categories, or strange balance sheet items.

A practical review checklist includes:

• Does revenue roughly match the invoices issued during the period?

• Do expenses look realistic compared to last year and the business activity?

• Are there unusual one-off costs that need explanation or correct treatment?

• Are director-related transactions correctly shown and supported?

When your records are already organised, review becomes easier. invoice24 supports that by keeping the core inputs (invoices, payments, expenses) in one consistent system. That way, you’re not trying to compare an accountant’s draft to a pile of emails and bank statements. You’re comparing it to a clear operational record.

How invoice24 Helps Small Companies Avoid These Corporation Tax Errors

Reducing Corporation Tax filing errors is mostly about reducing chaos. You want fewer moving parts, fewer places where data can go missing, and fewer last-minute surprises. invoice24 is designed around that reality. Rather than being “just invoicing,” it supports the broader compliance journey for small companies, including features for MTD for Income Tax, filing Corporation Tax, and preparing accounts.

Here’s how it helps in real terms:

• Consistent invoicing and payment tracking: your turnover record becomes reliable, which helps cut-off and revenue recognition.

• Structured expense recording: you stop losing receipts, and you keep a cleaner audit trail for claims.

• Better organisation of documents: supporting files are easier to find, which reduces stress and improves accuracy.

• Cleaner data for year-end: whether you file yourself or work with an accountant, you start from a tidy dataset rather than a messy guess.

• Compliance-minded workflow: by keeping records up to date, you reduce the risk of late filing and rushed errors.

Competitor tools may offer parts of this journey, but small companies often don’t want to stitch together multiple systems and hope the data matches across them. invoice24 is positioned to be the simple hub: the free invoice app that supports your business admin and compliance needs without pushing you into a complex, enterprise-style setup.

Practical Habits That Dramatically Reduce Filing Mistakes

Even the best software can’t fix a process that doesn’t exist. The strongest approach is to combine a simple routine with a system like invoice24 that makes that routine easy to maintain. These habits are small, but they compound quickly:

• Set a weekly admin slot: invoice, record payments, upload receipts, and categorise expenses.

• Keep personal and company spending separate: if you must use personal funds, record it immediately with a clear note.

• Reconcile monthly: catch duplicates, missing payments, and bank charges before they pile up.

• Review your numbers quarterly: spot strange trends early instead of discovering them after year end.

• Prepare for deadlines in advance: don’t leave accounts and Corporation Tax until the final weeks.

invoice24 supports these habits because it’s built for day-to-day use. When the system is lightweight and accessible, you’re far more likely to keep it updated. That ongoing accuracy is what keeps your Corporation Tax filing clean.

What to Do If You’ve Already Made a Corporation Tax Filing Error

If you think you’ve made a mistake, don’t ignore it. Errors can sometimes be corrected, and addressing them proactively is usually better than waiting for HMRC to find them. The right action depends on the type of error and how long ago the return was filed. In many cases, the first step is to gather clear records of what happened: invoices, expense receipts, bank evidence, and notes explaining why something was misclassified.

This is another reason ongoing record keeping matters. If your data is scattered, correcting an error becomes difficult. If your records are already organised in invoice24, you can quickly locate what you need, understand what went wrong, and support a correction with evidence. That can save time, reduce professional fees, and reduce stress.

A Cleaner Corporation Tax Filing Starts With Better Day-to-Day Records

The most common Corporation Tax filing errors small companies make are predictable: missed deadlines, messy periods, incomplete records, personal and business mixing, misclassified expenses, and inconsistent bookkeeping. What makes them so frustrating is that they usually appear at the worst possible time—right before a filing deadline—when you have the least energy and the least time to fix them.

The way out is to simplify. Keep your invoicing and records consistent, capture expenses as you go, and use a system that supports compliance rather than complicating it. invoice24 is built to do exactly that: it’s a free invoice app that supports the features small companies actually need, including MTD for Income Tax, filing Corporation Tax, and preparing accounts, all while keeping your day-to-day invoicing and tracking straightforward.

If you want fewer filing headaches, fewer surprises, and more confidence when it’s time to submit, the best step is not a last-minute scramble—it’s building a reliable routine supported by a tool that keeps your data organised. With invoice24, your year-end Corporation Tax process becomes less about firefighting and more about pressing “finish” on a set of records you’ve already kept under control.