Partner Article

Company accounts - don't pay the penalty!

With Watson Burton LLP Law Firm

A failure by Companies to file their accounts and reports for each financial period with the Register of Companies within specific periods is an offence and may result in a company being liable to a civil penalty under the Companies Act 2006. Generally, a private company is required to file their accounts 9 months after the end of the relevant accounting period, and 6 months in the case of a public company.

Companies House have identified that the penalty bands last introduced in 1992 no longer serve as a deterrent and the number of late filings have significantly increased. Consequently increased penalties were introduced with effect from 1st February 2009 taking into account the level of inflation since 1992.

New Penalty Bands

• Penalties have almost tripled depending on the lateness of filing.
• A new penalty band has been introduced for companies who file accounts up to even one month late. Previously only companies who filed accounts up to three months late were penalised.
• Bands vary depending on whether the company is a private limited company or a public limited company, and public limited companies will receive harsher penalties for late filings.
• Fines range from £150 for private companies filing accounts not more than 1 month late, to £7,500 for public limited companies which files accounts more than 6 months later than the due date.
• Repeat offenders filing late in two consecutive years will face double the penalty than the amount shown in the Table. The aim is to significantly increase the financial consequence on companies who persistently ignore the regulations.
• New regulations apply to accounts which were already overdue before February 2009 and therefore the new penalties will apply to all accounts delivered late.

Failure to pay penalties

• Once an invoice has been issued the penalty must be paid within the time limit specified, otherwise the amount will be referred to a collection agency.
• Legal action may be taken if a company still refuses to pay, which could result in a county court action against the company.

To avoid late filing penalties, companies should pay attention to any reminders sent by the registrar of companies and deliver accounts with plenty of time to spare - the Registrar will not waive penalties due to postal delays. Consequently, companies may also benefit from filing accounts online electronically.

New table of penalties (the “Table”) can be found on the Companies House website (www.companieshouse.gov.uk)

If you have any comments or queries on this article, or any corporate related matters, please contact Padma Tadi of Watson Burton LLP at padma.tadi@watsonburton.com or telephone 0113 235 5507.

This was posted in Bdaily's Members' News section by Ruth Mitchell .