Advice for Directors – Late Filing: Company Directors Personal Liability – Prosecutions
All companies must send their accounts and confirmation statements to Companies House each year in accordance with the provisions of the Companies Act 2006 (‘the Act’).
Not filing the accounts and/or confirmation statement at Companies House in a timely manner is a criminal offence under section 451 of the Act and directors can be personally liable which could lead to a fine in the criminal courts and a criminal record.
Should a company fail to file the accounts and/or confirmation statement in time or at all, directors may well receive a summons to attend the Magistrates’ Court in Cardiff. We are finding that this is an increasing practice so may affect you.
A summons will be typically issued against all directors.
Time Limits for Filing
A Private limited company must file its accounts no later than 9 months from the end of the accounting reference period.
A company can apply to extend its accounts filing deadline with Companies House if it is unable to file its accounts because of an event outside the directors’ control. This extension must be applied for before the filing deadline.
A Private company must file at least one confirmation statement every 12 months. A 12-month review period starts on either:
- The incorporation date of a company; or
- the date in which the last confirmation statement was filed.
A Private company must file the statement within 14 days of the end of the review period.
Defences to Prosecution Action / Mitigation
If the accounts and/or confirmation statement are late, then technically an offence is committed unless it can be demonstrated that the director took “all reasonable steps” for securing that the requirement would be complied with before the end of the relevant filing period. Further, the Court has the power to grant relief if it appears that the director acted “honestly and reasonably and that having regard to all the circumstances of the case [the director] ought fairly to be excused”. These defences set a high threshold for a successful defence.
It is vital to seek legal advice immediately should you receive a summons. This will allow the maximum opportunity to mitigate.
Criminal Penalties
A director found guilty of an offence under section 451 is liable to a personal fine in addition to a daily default fine for continued contravention.
If convicted, a director will have a criminal record and in circumstances where a director has more than one conviction this could result in disqualification proceedings being brought to prevent the director from holding a position as a director of a UK company (or having any high level involvement).
Separate Proceedings
Any civil late filing penalties issued by Companies House against the company are an additional sanction. The level of penalty depends on how late the accounts are and whether the company is public company or private. The penalty will be doubled if accounts are filed late in two successive financial years.
If accounts or a confirmation statement are filed late the company may also be struck off the register. This could have catastrophic consequences.
There is no financial penalty for the late filing of a confirmation statement but, as above, the is a real risk of the company being struck off the register.
It is important to ensure that company accounts are filed at Companies House in good time and well before the deadline. If Companies House return the accounts due to the fact that they do not meet the requirements of the Act and then corrected accounts are filed late, the company will still get a late filing penalty and so it is advisable to file documents well in advance of the deadline.
How to Ensure Filing Deadlines are Met
Directors can register for email reminders from Companies House to ensure the deadline is met.
The company’s accountants should also be aware of these deadlines and should be instructed in good time, particularly a company is required to file audited accounts. If a confirmation statement is filed early this will alter the review period as above, but again it is advisable that the statement is filed as soon as possible and well within the 14 days period.
If you find yourself in a situation where you are facing personal prosecution as a director, we suggest you obtain legal advice as soon as possible.
Should you wish to discuss the late filing of accounts and/or a confirmation statement or require assistance with criminal prosecution in connection with the same, please contact Alex May or Paul Cowdery in the Clarke & Son Dispute Resolution Team on 01256 320555.
