Companies House implements new powers and penalties

With the passing of the Economic Crime and Corporate Transparency Act 2023 (Financial Penalty) Regulations 2024 last year, the UK Registrar for Companies (Companies House) gained the power to impose civil financial penalties of up to £10,000 for the majority of offences under the Companies Act 2006.

This includes (but is not limited to) offences arising from:

• Failure to file or late filing of, confirmation statements, annual accounts or other documents required to be filed with the Registrar.
• Failure to keep and maintain the required statutory books and registers of a company.

These powers came into effect 2^nd March 2024 but Companies House previously indicated that they would not use their new powers until they had published guidance on their use, which they have now done here:

Companies House approach to financial penalties

Companies House enforcement policy

Summary

The guidance sets out:

• When Companies House can issue financial penalties.
• The steps they will take and associated timing.
• How fines will be calculated.
• The process for appeals.

Depending on the offence committed, penalties can be levied against both companies and every officer in default and the Registrar may impose:

• Fixed penalties – a set amount based on the offence, previous behaviour and other factors.
• Daily rate penalties – for each day that the offence continues.
• A combination of both.

If the Registrar suspects an offence has been committed they may issue a warning notice in writing, giving the individual or company 28 days in which to remedy the matter giving rise to the offence. Current guidance states that parties will not usually receive a penalty if the matter is remedied within the time specified. Recipients may also make representations to the Registrar, and the Registrar will not make a decision on offences and penalties until they have considered any information provided.

After the period stated in the warning notice (and after considering any representations), if the Registrar is satisfied that an offence has been committed, they may issue a penalty notice imposing financial penalties.

When imposing penalties, the Registrar will consider how many times the company or individual has committed the same or similar offences in the last 5 years. Penalties begin at £250 per offence for minor offences and first-time offenders but can increase to £2,000 per offence for very serious offences and repeat offenders.

It is worth nothing that while penalty notices are intended to be a quicker and cheaper alternative to prosecution of offences under the Companies Act, Companies House have made clear that they will still consider prosecution if individuals and/or companies commit the same serious or very offences 3 times in a 5-year period.

How to avoid penalties

It is unclear when Companies House will start exercising these powers but it is likely imminent as they have now published the guidance. The best way to avoid a penalty is to keep up to date with your responsibilities to Companies House and stay up to date with changes to UK Company Law.

How can we help

If you require advice or assistance in relation to your Companies House filings our Company Secretarial Service can help. Please do not hesitate to get in touch with our Corporate Commercial Team who would be pleased to assist.

See also our recent blog on Companies House introducing new rules regarding the registered office address of a company.