UK businesses issued with record fines for filing accounts late

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Last year, the number of British companies filing their accounts more than six months late rose in a row, sending fines to a record high, as companies struggled to put the pandemic behind them and convince auditors of their financial health.

Figures released by Companies House show that a record £34.4m in fines were handed out in 2023/24 to private companies that made serious applications for two consecutive years, up from £10.2m in 2019-20.

The total number of companies fined the maximum £3,000 for filing more than six months late was 11,463 in 2023-24, compared with 3,418 in 2019-20.

Companies are struggling with slower economic growth, higher borrowing and energy costs, as well as rising wages because of the pandemic. “Companies struggling after Covid never really got over it,” said Jonathan Dudley, a partner at accounting firm Crowe.

More businesses were struggling to prove to auditors that they had the financial strength to remain a “going concern”, Dudley said, contributing to the delay in filing accounts.

Private companies are subject to penalties by Companies House if they file their accounts late and the money is ultimately paid to the Treasury. Penalties range from £150 for those who file within a month of the deadline to £3,000 for for persons who file more than six months late in two financial years.

The number of £150 fines has fallen significantly since the peak in 2021-22, but longer delays in filing have continued to increase.

In total, Companies House has collected £785.2m in fines from all private and public companies that filed accounts late for 2018-19, according to a parliamentary question. Labor MP Phil Brickell.

Craig Beaumont of the Small Business Federation said: “We know that some smaller companies are heavily indebted with pre-pandemic trade debt and [Covid-era] to repay loans”.

The BBL scheme was launched in May 2020. It targeted the smallest businesses, offering loans of up to £50,000 or 25 per cent of annual turnover to help them stay afloat during the pandemic.

Dudley noted that the failure to file return loans by “ghost companies” formed during the pandemic may explain some of the increase.

Up to £47bn of payback loans have been provided with no credit checks required for borrowers.The Government has provided a 100 per cent guarantee on loans if businesses fail to repay.

The House of Commons Public Accounts Committee estimated in April 2022 that up to £17bn of payback loans would never be recovered and £4.9bn would be lost to fraud.

Brickell, member of the Anti-Corruption and Responsible Tax Parliamentary Group, said: “Companies House must ensure that filing deadlines do not continue to be breached on the worrying scale we are now seeing.”

The spokesperson of the government said. “This Government is committed to protecting the interests of taxpayers, which is why we have appointed a Covid Fraud Commissioner to look into Covid spending.

“We will use all possible means to recover public funds lost due to fraud related to the pandemic.”