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Companies House: The impact of late filings

01 August 2023

For any business whether large or small, effective governance is crucial.

One of the fundamental principles of company law is that a company is a legal entity separate from its owners and directors, capable of entering legal relationships in its own name and with its own rights and obligations separate from the individuals who own and run it.

Whilst the company may be viewed as a separate legal ‘person’ in its own right, others must still act on its behalf. This is why the role of a director is so important, and it is essential that a company’s directors understand their duties and where they lie.

In addition to managing the general day-to-day running of the company, a director is legally responsible as the ‘human agent’ and must ensure that certain obligations are met.

What is the issue?

Directors – as part of an array of statutory duties and responsibilities – have an obligation to file certain documents with Companies House. It is their responsibility to ensure that these documents are produced for each financial year and that they are filed with Companies House in a timely manner. Failure to make such filings can result in Companies House taking action to issue a strike-off notice if it considers the business is no longer operational because the documents have not been filed.

More specifically, under s386(1) Companies Act 2006 (‘the act’) all limited and unlimited companies – whether they are trading or not – are under a duty to keep adequate accounting records which, amongst other things, display and explain the company’s transactions and reveal the company’s financial position at that time.

Under the act, these accounts must give a ‘true and fair’ view of the financial status of the company and must be filed at Companies House within a specified time frame. Failure to file these accounts within these time frames can result in civil penalties being levied against the company.

Touched upon above, as a separate legal entity, a company provides a shield to its directors and safeguards them against certain liabilities. However, there are situations where this shield may fail, and the director may be liable in their personal capacity.

Whilst a company that fails to file their accounts at Companies House may be liable for civil penalties or be removed from the register, a director can also be fined in the criminal courts (s451 of the act). It is common for company directors not to anticipate this, especially in a large company where financial matters are delegated, causing them to have little or no involvement in matters such as the preparation of the accounts. Regardless of this fact, the director may still be liable for a fine in the magistrates’ courts.

What should I do?

It is evident that not filing documents in a timely manner can have a considerable impact on your business and that practical steps should be put in place to ensure that the company is able to file its accounts when they are due. In some limited situations, a company can apply for more time to file its accounts, however an extension will generally only be given if Companies House deems the reason for late filing to be exceptional. It is therefore important not to rely on this.

Directors should also ensure they instruct an accountant in good time, as the collating of documents may take a while.

It is important to note that if the accounts filed do not fulfil the Companies House requirements, they will be returned to the company to be amended. If these amended accounts are filed outside of the deadline, the business will still get a penalty for filing them late. Because of this, it is advisable to allow time for any amendments or delays.

To help directors remember to file accounts on time, directors can register for email reminders from Companies House.

Do you have any questions regarding Companies House that may require legal expertise? If so, do not hesitate to contact our corporate & commercial team.

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Our corporate & commercial team is rated by national legal guides The Legal 500 and Chambers UK. The department’s expert lawyers can help businesses big or small on a variety of corporate challenges that may arise.

Disclaimer: All legal information is correct at the time of publication but please be aware that laws may change over time. This article contains general legal information but should not be relied upon as legal advice. Please seek professional legal advice about your specific situation - contact us; we’d be delighted to help.
Chris Wills LLB (Hons)
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