If you have received a penalty from Companies House for late or non submission of a return or accounts you will have asked yourself is this an allowable expense for corporation tax.
The short answer is No. Fines and penalties of any sort are not allowable for a corporate tax deduction (but are put through the company accounts) there is a small possible exception if the fines or penalties are being paid on behalf of an employee.
For an expense to qualify for a tax deduction it has to have been ” incurred wholly and exclusively for the purpose of the trade” , wholly meaning the costs and exclusively meaning the purchase was used in the business only.
The deductability of fines and penalties has been tested in the courts and in one case a judge stated that because a fine is intended as punishment, it would be unjust if other tax payers had to foot part of the bill.