NEWS: Companies House Announces Non-Compliance Penalties

Following the Economic Crime and Corporate Transparency Act, Companies House has been broadening its powers. Including, the new penalty system announced this September.

In short: registered companies must keep on top of their filing responsibilities or face penalties, says Companies House, following a new crack down on misuse of the company register.

What is Non-compliance? 

If you’re a business owner with an existing company, you must file your annual accounts and confirmation statements within your 12-month period. This filing period begins from the first time you submit your accounts and statement. If you fail to file on time, your company is non-compliant with company law.

Companies House also considers ignoring any communication about filing (i.e. default notices to file) as non-compliance. For example, if a company misses the filing deadline by two months and subsequently ignores any communications from Companies House prompting them to file, they are non-compliant and will face a penalty.

The severity of the penalty and its enforcement will depend on the severity of the act of non-compliance. For example, if a company files their accounts late once or twice they will be issued a fine. However, if they regularly file late, or miss their filings creating multiple gaps in their company history the individuals involved can face persecution alongside other severe penalties.

Essentially, to avoid facing a penalty of any kind, a company must file their annual accounts and confirmation statement on time, or early, and do so for the lifetime of their company.

• File Your Confirmation Statement Today.

What Type of Penalties Will Companies House Give?

Companies House has created a risk-based approach to enforcing any breaches of company law, which categorises the level of non-compliance with an appropriate level of penalty. However, this is not a conclusive list of penalties and breaches. Companies House will consider each individual case and even refer some to the Insolvency service to promote a ‘holistic enforcement action’.

You can find the full breakdown of their compliance framework on gov.uk, but here are the key highlights:

• Level one: Complaint: The company or individual always files on time or early, particularly when updating Companies House about changes. There is no penalty for this. 
• Level two: Complaint with Support: The company or individual occasionally misses the filing deadline but has a complete history. When promoted they file and update records. This will incur a penalty and the issuing of default statutory notices.
• Level three: Disregard for Compliance: This company or individual regularly cuts corners, fails to comply with most deadlines, and makes errors in filing (due to lack of understanding). However, will complete filing when compelled to do so. This will incur Companies House using their querying powers to look into this organisation as well as a court order. 
• Level four: Non-compliant: The company or individual pays little to no attention to communications from Companies House, regularly files late, and has significant gaps in their filing history and a pattern of inaccurate filings. This can lead to persecution, financial penalties or being struck off the register, and more severe penalties. 
• Level five: Seriously and Severely non-compliant: The company or individual pays no attention to communications from Companies House, disregards filing obligations, has a history of late filing, walks away from the company (and has a history of doing so) and has a pattern of non-compliance across multiple company records. This will incur a case-by-case penalty and sanctions against your company.

How Can I Avoid Penalties? 

File your annual accounts and confirmation statement on time with accurate information. Secondly, always update your company information when things change. For example, when you add a new director or move your registered office address.

It can be easy to forget about your filing obligations, but the best way to avoid any penalty is by filing and filing on time. However, you can rely on services like ours to help you file on time and correctly.

Our customer service team is available to any Companies MadeSimple clients for free, forever. This means we can guide you through your annual filings. Here at Companies MadeSimple, we have made this process more efficient and hassle-free with our annual confirmation statement packages. So skip the stress of filing, and let us help!