Company Director House Late Filing Penalties for Accountants
This article is relevant for all private and public companies registered in the UK. The article aims to explain how a late filing penalty is imposed against the company when its financial records are not filed in-time (before or by the filing deadline). It also lets companies understand how they can appeal in case of any discrepancy (if a late filing penalty has already been imposed etc.). The following are the main legislation that applies to UK companies:
- Companies Act 2006
- The Companies late filing penalties and Limited Liability Partnerships (LLP) Regulations 2008 (SI2008/497)
Introduced in 1992, Late filing penalties aimed to persuade company directors to file their financial records and reports on time. All companies including private or public, trading or non-trading, large or small are required to send their financial reports to Companies House each year. An automatic penalty is imposed by law, if a company submits the reports late. The time period permitted by the House to file the accounts depends on whether the accounts are being filed for the first time or they are subsequent accounts. For companies filing for the first time, if the period covers more than 12 months, it must deliver the reports to Companies House within 18 months from the date of incorporation in case of public companies and inside 21 months in case of private companies, or 3 months on or after the accounting reference date (whichever is the longer).
In subsequent years, a private company can deliver its accounts in 9 months from the end of the accounting reference period whereas; a public company has 6 months to do so. However, the filing time may be reduced if the accounting reference period is changed. If an individual is a director of the company, he / she is responsible for making sure that the accounts are delivered to the Companies House before time lapse. Delivery means authentic receipt at Companies House in the acceptable format.
The amount of the penalty imposed depends on how late the accounts reach Companies House (the rates vary for both private and public companies):
Corporation Tax penalties are issued for late filings, and increase with time.
- Late by a day or 3 months Penalty amount of £100.0
- Late by 6 months or 12 months Penalty of 10% added to estimated tax bill
- Late payment — Every overdue payment will impose a penalty of 3.0%
Construction Industry Scheme
Individuals working under CIS will have to pay penalties as per the following table if filing deadlines are missed
- Late by a day Penalty amount equals £100.0
- Late by 2 months Penalty amount equals £200.0
- Late by 6 months or 12 months Penalty amount of £300.0 or 5% of CIS deductions (whichever is greater)
How to avoid penalties
In order to avoid penalties, sufficient time must be kept to ensure that the accounts reach Companies House within the permitted time-period allowed. Even if a filing deadline falls on a Sunday or bank holiday, the law still wants the accounts to be filed on or before the due date. Companies must ensure that they consider using a guaranteed method of delivery to make sure the accounts reach on time. To help file on time:
- Carefully read and make a note of the filing reminders received from the Companies House
- Use outlook calendar alerts / mark the diary to remind about the filing deadline(s)
- If possible, instruct the accountants’ well in-advance to prepare and deliver the accounts on time (in case the company is working with an outsourced accounting firm they don’t need to worry about this)
How to deliver accounts to Companies House or pay penalties
Companies’ house typically sends the late filing penalties notice to the registered office address. In case, a company wants to seek clarification, they can call the Companies House at 0303–1234–500. Payment of penalties can be made by cheque (company number and name should be notified behind the cheque) at the following address:
Companies House, P.O. Box 710
Crown Way, Cardiff
For companies registered in Scotland, the address is:
4th Floor, Edinburg Quay 2
139 Fountain bridge, Edinburg
Companies House late filing penalties appeal
Companies House cannot accept accounts till the time they meet the necessities of the Companies Act. In case, the balance sheet or any other report is not signed, Companies House will return them for amendment. For late filings, Companies House issues a notice giving details of the penalties imposed against a company along with information regarding last date for filing, and the level of the penalty imposed.
A company can even appeal at the Companies House. While making an allowance for an appeal against a penalty a case manager should be fair, and have the ability to analysis and reach to a correct decision. Personal business should not manipulate the decision making. However, if a company decides not to pay the penalty, the Companies House will ask the debt collectors to take strict action. Eventually the matter will be decided in the Sheriff Court or County Court where a company will have an opportunity to file their defense. A company must seek professional advice to get clarity in the matter as the Companies House may seek to recover the legal costs if the court rules in favor of the registrar.
This content is also shared at: https://www.linkedin.com/pulse/companies-house-late-filing-penalties-vidit-agarwal