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Companies House clampdown

1 Dec 08

Stuart Morgan outlines why the deadline for filing business accounts has been reduced from next February – and what it will cost to miss it

by Stuart Morgan

From 1 February 2009 businesses filing accounts late at Companies House will receive higher penalties. There will be faster escalation through the penalty bands and a double penalty will be introduced.

The penalty regime will change for all companies and limited liability partnerships that file late from 1 February 2009.

Why change?

Companies House is the foundation of company information exchange in the UK, helping business, informing the public and benefiting the UK economy. In the financial year 2007/8, there were more than 1.6 million accounts searches, which illustrates the importance to business of an up-to-date company register.

Parliament introduced the late filing penalty regime in 1992 to encourage directors to file accounts on time. Before 1992, fewer than 60 per cent of companies did so and the introduction of the late filing penalty regime increased this figure to over 86 per cent.

 

In recent years, the impact of the regime has lessened with only 84 per cent of companies filing accounts on time, and more than a quarter of companies that file late do so repeatedly. Many companies wait until nearly three months after a filing deadline before filing accounts, incurring the £100 minimum penalty.

The new legislation was steered through the House of Lords by the Parliamentary Under-Secretary of State for Business and Competitiveness, Baroness Vadera. In her opening statement, she said: “Its purpose is to provide transparency for customers, suppliers and other stakeholders by ensuring that the United Kingdom has a complete public register of company accounts.”

It is in a company’s interest to file accounts on time. An accurate and up-to-date company record is useful for potential business partners researching a company. Failure to file on time leaves an incomplete company record, giving a potentially damaging impression.

Baroness Vadera went on. “Our objective is a public register which contains the up-to-date accounts of every British company, underpinning a healthy market economy. We will continue to work to encourage companies to file on time.”

Key elements

There are three key elements to the change. The first increases penalties in line with inflation since the inception of the late filing penalty regime. The second element is shorter penalty bands, designed to reduce the amount of time companies are in default. Third, the regulations introduce a double penalty for companies that repeatedly file late. This means that companies that file accounts late for financial years beginning on or after 6 April 2008 will incur a double penalty if they file late again in the subsequent year. More than a quarter of companies that file accounts late did the same in the previous year. The new double penalty is aimed at deterring repeated non-compliance.

By increasing the number of compliant companies on the register, these changes will help us to continue to help business, inform the public and benefit theUK economy.

Discretion

The registrar has very limited discretion to waive a penalty. It is only applied in exceptional cases. Because discretion is so limited, it cannot be used for reasons such as accounts being delayed in the post and arriving a day or two late.

There is no special dispensation for companies that are not trading or for residents’ management companies or for charities.

We recommend that companies file accounts well in advance of a filing deadline and check that they have been received. The best and most secure method is to e-file accounts.

Particularly care is needed when posting accounts close to a filing deadline.

 

Details of the regulations can be found at www.opsi.gov.uk

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Page No: 106

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Companies House | accounts | late filing | Fabrice Desnos

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