Late Filing Penalty Consultation Companies House
Comments from ACCA
October 2007
ACCA is pleased to comment on the consultation on the above.
We agree that the consideration of this issue is timely, given the time that has elapsed since the current regime was implemented and given the pattern of company behaviour that has been identified.
1. Would the proposed new regime meet Companies House's objective of persuading companies to file their accounts on time?
Fines can be useful as additional incentives or deterrents, but we do not believe that, by themselves, they are effective in terms of persuading more companies to submit their accounts by the set deadline. By now, the penalty regime will be well known to all companies and those that still file late will do so in the full knowledge that they will have to absorb a penalty when, eventually, the accounts are filed. Increasing the level of fines on the basis proposed will help to offset the complacency that may have set in with regard to the existing level of fines. But it should not be the only response to a deteriorating situation as regards punctuality of filing.
One factor which might affect companies in relation to late filing is the fact that fines are only imposed at such time as the accounts are actually filed. This enables companies effectively to postpone the filing of their accounts, and the absorption of the consequent penalty, until they have attended to other matters which they think are more pressing or which might improve their cash flow to the point where they are willing to bear the penalty.
Increasing the rate at which fines increase is one way of tackling the practice of deliberately engineering late filing. But Companies House could also consider imposing fines, or at least a notice that a fine will apply, as soon as a company has infringed the filing deadline. This would be administratively more complicated than the current system, since the situation would have to be monitored and additional fines would have to be imposed if the accounts continued to be withheld, but it would perhaps serve to convey the message more effectively that missing the deadline has already caused the company to incur a penalty.
Over and above financial penalties, we believe that it should be possible for Companies House to contact companies directly before the expiry of the relevant filing deadline with a reminder that the deadline is approaching. This could be done using the information held on file on each company's current accounting reference period. Many companies might respond more positively to an encouragement of this kind rather than to a penalty.
2. Would the proposed new regime be a fair and proportionate response to the issue of late filing?
We agree that the revised scale would meet these criteria.
3. Should the date on which the new penalties come into force be 1 February 2009 or should it be earlier or later?
We agree that companies should be given adequate notice of the new arrangements, but query whether the notice need be quite so long. We suggest that 31 December 2008 would be more suitable.