When was the last time you, as a director or company secretary, reviewed your Company’s filings at Companies House? Under the new powers given to Companies House by the Economic Crime and Corporate Transparency Act 2023 they now have the ability to issue penalties for non-compliance.
The objective is to improve the accuracy of what the public sees on the UK Company register. It is all very well having the ability to look at a Company easily on Companies House, but you also need to be able to rely on the information. The key reason why Companies House has acquired these new powers, is that criminal activities such as money laundering etc. need to be greatly reduced if not eradicated totally. Up until recently, Companies House’s remit was to act as a registry where you sent documents to be filed, and they appeared on the company’s filing history without many checks. This changed as of May 2024 and we are seeing the results of this by noticing that Companies House are checking address details given for new directors and PSCs. The Registrar now actively scans previous filings for inconsistencies, and if erroneous or inconsistent filings are found, the registrar may reject a new filing until the error is corrected or the inconsistency is explained.
The issue of penalties is the next step in this process. When Companies House identifies non-compliance with or breaches of the law, Companies House will be able to take civil actions, initiate criminal proceedings and ask the Courts for disqualification orders to be issued to directors. Penalties will be issued proportionally to the non-compliance incident and Companies House will take particular account of how far duty holders have fallen short of what the law requires, and the extent of the harm caused. In order to do so they have developed a compliance framework. Companies will be classed from level 1 to level 5 with level 1 being companies that file on time and would be identified as “compliant” and level 5 being companies that are identified as being seriously or serially non-compliant.
Financial Penalties have only been given so far for late filing of accounts, but this is going to change, although we do not know from when. When setting a financial penalty Companies House will consider the seriousness of the offence and how many times the Company has committed the same or similar offences in the last 5 years. Currently, the levels of penalties look to be from £250 for the first minor offence and up to £2,000 for a serious offence that has occurred four or more times.
Companies House will issue warning notices before issuing the penalties to provide direction on how to correct an issue and if that warning notice is acted on within the time scale indicated within the notice, then you are likely to avoid a penalty being enforced. There will also be the right to appeal.
Now is therefore the time to take a look through your filing history, make sure that everything is correct and up to date and diarise those filing dates if you haven’t already. If you identify something that isn’t quite right and you are unsure what to do then seek assistance with any rectification.
For expert Corporate Governance advice for your business, please contact us to speak to a member of our Corporate Governance Team.
