Don’t risk late filing penalties
Those with a limited company will know that annual accounts must be filed with Companies House. Even dormant companies are legally required to provide this document, which contains a summary of the organisation’s performance and financial position over the previous accounting period.
If the accounts are not submitted on time, penalties are applied – and the later your accounts are filed, the larger the penalty. If filed up to one month late, a fixed penalty of £150 applies. For one to three months late, this rises to £375, while a three to six month delay will cost your business £750. Leave it longer than that and you’ll find a £1,500 fine waiting for you.
The penalties are even harsher for public companies, who can find themselves owing up to £7,500 for annual accounts that are filed more than six months late.
Are the Companies House penalties enforced?
It goes without saying that late filing penalties are unwelcome. However, according to the Financial Times, less than half of the fines issued to UK businesses for late filing in the last financial year were paid. Of the £158 million issued in penalties in 2023/24, only 46% – amounting to £73.5 million – was paid. Between the 2018/19 and the 2023/24 financial years, a reported total of £386 million had not been collected, leading to questions about the efficacy of Companies House enforcement.
No information, however, has been published about the number and value of fines. As such, it could be a small handful of companies repeatedly failing to pay. According to Companies House, debts are written off after four years when “all recovery options have been exhausted or there is no economic benefit in pursuing them any further.”
So can my business simply ignore the penalties?
Although the figures suggest that over half of the value of the issued fines remains unpaid, it’s not necessarily a good idea to ignore them. There’s no evidence that your business will get away with an attempt to dodge the penalties: in 2023/24, 987 directors were prosecuted for failing to pay.
Furthermore, ignoring penalties can result in being struck off the Companies Register. This means the business ceases to exist as a legal entity and can no longer trade, hold assets or be held liable for debts. Any remaining assets are transferred to the Crown, bank accounts are closed, and directors and shareholders face investigation.
It’s worth noting that some of the unpaid penalties are attributed to ‘ghost’ companies, which were formed during the pandemic to receive Bounce Back Loans, but have since gone insolvent with the directors disappearing. It’s estimated that up to £17 billion of these loans would never be recovered – leaving little chance that Companies House fines will be repaid either.
Avoid late filing penalties
The best option for businesses of all sizes is to ensure they always file their annual accounts on time. If your organisation struggles with this, outsource the burden to a reputable accountant to ensure the documents are prepared accurately and submitted in plenty of time.
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