Late Filing of Accounts

On the 20th July 2007 the Government issued the Implementation of the Companies Act 2006 – Section 453: Civil Administrative Penalties for the late delivery of Company Accounts (“Late Filing Penalties”) consultation document. The majority of the proposals set out in the consultation document were incorporated in the draft regulations and subsequently in The Companies (Late Filing Penalties) and Limited Liability Partnerships (Filing Periods and Late Filing Penalties) Regulations 2008 (in force from 6th April 2008), which will increase the penalties for late filing of accounts for private companies, public companies and limited liability partnerships alike.

The current penalties for companies filing accounts late at Companies House are as follows:-

From 6th April 2008 the final threshold for more than 12 months in the table above will no longer be effective where section 441 of the Companies Act 2006 is complied with before 1st February 2009.

 

The proposed penalties for companies after the 1st February 2009 are as follows:-

 

The rationale behind increased penalties is partly to take account of inflation between 1992 and 2007, but also to ensure there is a faster rate in increase in penalties for companies who file more than one month late. It is also proposed that there should be a doubling of the penalty for any company which files late having also filed late the previous year. This doubling of penalties would only apply to accounts filed under the Companies Act 2006.

The current timetable for implementation of the Companies Act 2006 sets out that new provisions relating to Company Accounts and Reports will come into force on the 6th April 2008. Section 442 of the Companies Act 2006 will shorten the period for filing accounts from 10 months from “year end” to 9 months for private companies and from 7 months to 6 months for public companies. These provisions will apply to accounts for years beginning on or after the 6th April 2008. As companies will need to adjust to the requirement to file accounts every 9 months as opposed to every 10 months the penalty increases are intended to take effect in respect of accounts delivered late on or after the 1st February 2009, regardless of the company legislation in force when the accounts were prepared. A 9 month filing deadline is also applied to limited liability partnerships, but the provision for doubling the penalty for late filing in two successive years will not apply as section 453 of the Companies Act 2006 does not apply to limited liability partnerships.

The likely reason for the changes to the late filing penalties would seem to stem from statistics showing a surge of accounts currently being delivered just under three months late, thus falling within the £100.00 penalty threshold rather than the £250.00 threshold. Companies House believes this to be deliberate behaviour as companies have indicated that a £100.00 fine for three months extra time to prepare and submit accounts is seen as somewhat of a bargain. Indeed, a significant number of late filing companies do so repeatedly and pay their penalties without complaint, which is why the doubling of penalties is seen as a simple attempt to remedy the current trend.

 

 

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Members of our team specialising in this area:

Mark Thompson