TaxCalc Blog

Late Filing. The facts and figures (and how to avoid a £1,500 sting in the tail).

Companies filing their accounts late can incur an eye-watering £1,500 fine after six months. One would think that’s enough to focus the mind, yet the number of penalties being handed out by Companies House has seen a spike over the past year. The stats for the year to March 2017 make interesting reading:

206,575 penalties were levied, an increase of 11,588 from the previous year.  

The cost of those penalties was £90.7m.

42,789 double penalties were levied. Repeat offenders (companies which had filed their accounts late in successive years) were fined £38.7m.

30,670 appeals were received against the penalties.

Just 2% of those penalties were waived.

With month end fast approaching, the moral of the tale is pretty obvious: file accounts in a timely manner before the deadline arrives.

What is a Late Filing Penalty? 

The Late Filing Penalty (LFP) scheme was introduced by Companies House as a stick rather than a carrot to encourage prompt filing. The size of the penalty is calculated according to the length of time accounts are filed after the deadline. A company that files late for two consecutive years will incur a double penalty in the second year.

Period overdue                                                                   Penalty
Note more than 1 month                                                    £150
More than 1 month but not more than 3 months           £375
More than 3 month but not more than 6 months           £750
More than 6 month                                                              £1,500

LFPs are collected by the Registrar, who doesn’t have the power to cancel a penalty once it’s accrued, though in exceptional circumstances, the Registrar does have limited discretion to not collect an LFP.

Whose responsibility is it?

It’s the legal responsibility of the company’s officers to ensure that accounts are prepared and delivered to Companies House on time under section 441. However, under section 453 of the Act it’s the company, not the individual officers that will incur the LFP. Companies may be taken to court to enforce the penalty. Any additional costs will also be added to the final bill.

How you can reduce the risk of receiving an LFP

It’s sometimes unavoidable to leave finalising and filing accounts until the last minute. But, as with most things in life, it pays to be prepared. 

Make sure that:

• All accounting records have been received
• All queries have been resolved
• The final accounts have been signed and returned well in advance of the filing deadline

Missing signatures are a common reason for rejection of paper filed accounts (no signature is required on accounts filed electronically).

You can check your company record to see your due dates for filing and also confirm that details held at Companies House are up to date. Check that the company name and number match exactly those used within the accounts and that the accounting reference date is as expected. Incorrect details such as these are other common reasons that accounts might be rejected.

Electronic Filing

It won’t surprise you to learn that electronic filing to Companies House is becoming increasingly popular. This is the most cost effective and efficient option, typically with far fewer rejections incurred (on average almost twice as many paper filed accounts get rejected compared to electronic filings).

If you do submit electronically, don’t assume that you’ll receive a response straightaway or even that the accounts will be accepted. Companies House states that after an electronic submission has been received validation can take up to 5 days though the vast majority are processed within 24 hours.

If the submission is rejected, it’s important to allow enough time to make any corrections (if appropriate) and re-submit before the deadline. Note that Companies House will not recognise an attempted submission as ‘filing on time’. Accounts must be accepted to avoid a penalty.

Paper Filing

If you’re submitting accounts by post it’s even more important that enough time is allowed for the accounts to be processed. Companies House states that paper documents will take around a week to process (sometimes longer at peak times).

And, should the accounts be rejected, it will typically take longer to get notified.

Companies House advises that if you are using a postal delivery service:

• Be aware postal and other delivery services may be subject to loss or delay
• Note any industrial disputes or other factors which may make it difficult for a carrier to deliver on time
•  Use a guaranteed delivery service when posting close to a deadline

Companies House will not accept delays in transit as a reason to waive a penalty.

How to request extra time to file your company’s accounts

If there is a special reason for doing so, you may apply to extend the time for delivering accounts to Companies House; for example, if there has been an unforeseen event which was outside the control of the company and its auditors.

You should make the application in writing and deliver it before the normal filing deadline. It must contain a full explanation of the reasons for the extension and the length of the extension requested. Click here for further details.

What to do after submission?

Once you’ve sent the accounts, it’s important to check that Companies House has accepted them.

If you’re filing to Companies House using TaxCalc Accounts Production you can check for a status update in two ways: either in Check and Finish, Online Filing History or in View, Companies House Filing History. You can also sign up to the new Companies House "Follow" service. Follow is a Companies House service which sends out email alerts of company transactions. The alert gives instant notification of what’s been filed with Companies House as soon as it’s been accepted.

The email will contain a link to the filing history of the company where a copy of the document can be downloaded for free.

How to use Follow

Click here and follow the steps below to begin following companies:

• Sign in once you’ve registered an email address and password
•  Search for a company to follow
•  Select the company
•  Click on ‘Follow this company’

The Follow service is available free of charge on CHS.

Finally

To reiterate the obvious. Do all you can to file on time. Sometimes getting the necessary information can be a more time-consuming task than expected. Electronic filing ensures greater accuracy and as a result increases the likelihood of getting your submission accepted. We’ve made filing to Companies House using TaxCalc Accounts Production as straightforward as possible but if you have any concerns, the TaxCalc support team is on hand to help. If you’re weighing up the pros and cons of paper versus electronic filing visit Companies House. Find out more about TaxCalc Accounts Production.

Further reading

Full details on Late Filing Penalties can be found within guidance provided by Companies House found at: 

Companies: https://www.gov.uk/government/publications/late-filing-penalties

LLPs: https://www.gov.uk/government/publications/late-filing-penalties-limited-liability-partnerships

Paper processing dates can be found here:
http://resources.companieshouse.gov.uk/dashboard/paper-processing-dates.shtml

Further information on delivery to Companies House by post can be found here:
https://www.gov.uk/government/publications/delivery-of-documents-by-post 

Source of statistics:  (Trust Statement: Late Filing Penalties 2016/17)