Companies House Penalty | Causes & How to Appeal Late Filing Fines

Running a business in the UK means staying compliant with Companies House and HM Revenue and Customs (HMRC). However, managing finances, juggling clients, and trying to grow your business while staying compliant with the legal bodies can be challenging. 

Businesses often miss filing or payment deadlines, leading to a Companies House penalty. You must meet statutory deadlines to avoid penalties. This guide highlights the causes of Companies House penalties and costs. It also discusses how you can appeal late filing fines and ensure timely compliance.

Companies House Late Filing Penalties

All limited companies and LLPs must file annual accounts with Companies House every year. Whether you are a private or public company, large or small, trading or dormant business, you must send your accounts and reports to Companies House. 

Companies House imposes an automatic late filing penalty for submitting your accounts late. The amount of time you have to file depends on whether it is the first year or a later year. 

If you are a private company, you must file your accounts within 21 months of starting the company. However, if you are a public company, you must file your first accounts within 18 months of starting the company. 

Remember, the window to file your accounts gets shorter once you are past your first year. After the first year, private companies must file within 9 months after the financial year ends. Whereas, public companies must file accounts within 6 months after the financial year ends. 

Other details include:

1. Accounts Reference Date and Accounting Period for Filing Information
2. Confirmation Statement
3. Corporation Tax Payments
4. Self-Assessment Tax Returns
5. VAT Returns

HMRC allows the filing of tax returns by the 31st of January if you are submitting them online. If you are submitting returns on paper, the deadline is 31st October every year.

Are you late in filing company accounts with the Companies House? Don’t worry, as the best accountants and tax advisers at AccountingFirms are always eager to help you. 

How Does Companies House Penalty Work?

There are many types of Companies House penalties for businesses committing different offences. The penalties are categorised by penalty structure and offence type. 

Penalty Structure

Companies House can issue three main types of penalties, depending on the duration and severity of the non-compliance. Here are three penalties you get from Companies House:

• Automatic penalty, issued when you are even one day late for filing accounts
• Double penalty is the second penalty, which is automatically doubled if your accounts are late for two consecutive financial years. 
• Directors can be personally fined for failing to file. It is their legal responsibility to file accounts, and if they fail to do so, the consequences move from company fines to personal fines.

Causes of Companies House Penalty

Simply, the offences cause Companies House penalties. The common offences include:

Ignoring the Warning Notice

Companies House sends a warning notice to the registered office address. This notice alerts you and draws your attention to the possible breach of the law. It is crucial to respond to the warning notice to ensure the filing of appropriate documents and avoid the financial penalty.

Receiving a Penalty Notice

Failing to fulfil the conditions of the warning notice leads to a penalty notice. The penalty notice includes the legal grounds for issuing the penalty, penalty types, how it is calculated, penalty amount, how to pay and consequences of not paying the penalty. 

Inaccurate Filing

Another common cause of a Companies House penalty is submitting false or misleading information. This leads to severe financial penalties or criminal prosecution if fraud is suspected. 

Remember, receiving a warning or penalty notice is normal. You don’t need to panic. However, you have to ensure to pay attention to the penalties. Let’s discuss some common penalties that Companies House issues. 

Late Confirmation Statements

There is no automatic financial penalty for late confirmation statements. However, failure to file is a criminal offence and may result in:

• A fine of £5,000 or more for directors
• Striking the company off the register

Failure to Maintain Register

If a company fails to keep up-to-date official registers of directors or shareholders, it can trigger a Companies House penalty.

What are the Penalties for Late Filing at Companies House?

You may come across at least one warning notice or penalty after registering your business. Although the most common Companies House penalty is filing a late annual report, there are other penalties for not maintaining proper company registers or for providing inaccurate information. 

Late Filing of Annual Accounts

The late filing penalty is the most common. You must file your accounts and reports with Companies House once a year. If you miss the deadline, a fine is issued automatically. These fines depend on how late the filing is and whether you repeated the offence. 

Your first offence might be manageable, but if you keep repeating the offence and delay your filings, the penalties will be doubled. 

Fines for Late Filings of Accounts

Delays can be accidental, but the law holds company directors responsible for ensuring reports reach Companies House before the deadline. Moreover, the level of the late filing penalty depends on how late you are. 

The table below shows the late filing penalty fees:

Length of period	Fine for late filing for a private company	Fine for late filing for a public company
Upto one month	£150	£750
1 to 3 months	£375	£1,500
3 to 6 months	£750	£3,000
More than 6 months	£1,500	£7,500

Disclaimer: These fines are set by law and can change. Although this data is current and accurate, it is best to verify the rates from the official Companies House website. 

How to Deliver Accounts to Companies House

Most Limited Liability Partnerships (LLPs) and limited companies can use advanced commercial software to file accounts. They can also file accounts through the online system. 

Visit the official website of Companies House for further guidance on preparing annual accounts and filing your Companies House accounts. 

No need to take stress if you’re late for the late filing, as we can sort out your tax filing issues accurately and professionally. Let’s get instant help from the top-notch accountants at the AccountingFirms.

Are Companies House Penalties Tax-Deductible

Companies House penalties are not tax-deductible. According to the HMRC, expenses that are incurred wholly and exclusively for business are tax-deductible. These penalties are charged to penalise a breach and are not used to run a business. Therefore, you cannot subtract these from your profit.  

No, Companies House penalties are not deductible for tax purposes because they are not incurred wholly and exclusively for business purposes. Companies House penalty costs are not considered necessary for running a business, but they are designed to penalise a breach of UK tax regulations. 

How to Avoid HMRC Fines

Complying with HMRC tax requirements is also crucial, just like Companies House. You need to adhere to the new digital reporting rules and traditional deadlines to avoid HMRC penalties. Since many penalties for late filing and payment are now automated, the margin for error has decreased. 

Self Assessment

Sole traders, members of LLPs, and limited company directors and shareholders need to register for Self Assessment and file tax returns to HMRC. 

You must ensure to meet the filing deadline to avoid HMRC penalties. The deadline for online filing is 31 January after the end of the tax year. For paper filing, the deadline is 31 October after the end of the tax year. 

Moreover, HMRC issues two types of Self Assessment fines:

• For late filing
• For the late payment of tax due

Late Filing Penalties for Self Assessment

HMRC applies the following fines for late filing:

• An initial £100 penalty
• After 3 months, a £10 daily penalty for up to 90 days (maximum of £900)
• After 6 months, 5% of the tax due or £300, whichever is greater
• After 12 months, another 5% or £300, whichever is greater

Note: HMRC may apply an additional penalty if they believe the taxpayer is intentionally withholding the information. 

Late Payment Penalties for Self Assessment

HMRC applies penalties of 5% of the tax unpaid at: 

• 30 days 
• 6 months 
• 12 months 

Additionally, HMRC also charge interest on the amount owed. Therefore, you need to pay your Self Assessment tax bill by the due date to avoid hefty penalties. 

Late VAT Payment Penalties

HMRC also issues strict fines for Value Added Tax (VAT)-registered businesses that miss VAT returns and payment deadlines. Ensure to file returns and pay prompt tax bills.

If you are late with your tax for more than 15 days, you may have to pay a late payment fine. The sooner you pay, the lower the payment penalty will be. 

You can submit and pay your VAT return online by the 7th of the month, one month after your period ends. Also, you need to pay early enough for the funds to reach HMRC’s account. 

Find out when your VAT returns are due and check and appeal penalties by using your VAT online account. 

Note: Maintaining accurate records and ensuring Making Tax Digital (MTD) compliance also helps you prevent risks of HMRC penalties. 

How to Appeal a Companies House Penalty

Businesses can appeal for a late filing penalty. Companies House will only accept an appeal if you can demonstrate exceptional circumstances beyond your control.

The registrar has limited discretion, and most appeals based on standard business delays get rejected. Your appeals are rejected due to the following reasons:

• You cannot afford to pay
• Your company is dormant
• You relied on the accounting experts
• Your accountant was sick
• Your company is struggling with financial difficulties
• Your LLP or director is responsible for preparing the accounts
• Your LLP or director lives overseas
• You don’t know the filing requirements

If your appeal is rejected, review your refusal letter. You can contact the Senior Casework Unit and strengthen the appeal. If the Senior Casework Unit still says no, you can ask the Independent Adjudicators for a review of your case. 

Remember, you don’t directly contact adjudicators until the Senior Casework Unit makes a final decision. If you have valid reasons, your appeal is likely to be accepted for the Companies House penalty. 

How AccountingFirms Can Help With Companies House Penalties?

Managing accounts and business operations all at the same time can be stressful unless you have professional consultation. At AccountingFirms, our skilled accountants provide the most efficient and accurate accounting services that help you stay compliant. 

Moreover, we manage your documents and ensure you never miss any deadline, hence preventing the risk of costly Companies House penalties. 

The Bottom Line

A Companies House penalty is non-negotiable, and that’s why you must ensure to avoid these fines. The penalty is automatic, and the  Registrar of Companies has limited discretion to waive it. 

However, you can manage and stop these penalties from escalating to the next tier by filing your overdue account immediately. This is the best way to handle your Companies House penalty. 

Disclaimer: The information provided on AccountingFirms.co.uk is for informational purposes only and should not be considered as financial advice. Always consult with a professional accountant to ensure compliance with UK laws and regulations.