April 29, 2024 Companies House to gain new powers to issue financial penalties
The Economic Crime and Corporate Transparency Act 2023 (ECCTA) gives Companies House new and wide-ranging powers to help fulfil its objectives and ensure that information on the register is correct.
As Companies House transforms from a passive recipient of information to an active gatekeeper more akin to a regulator it will also have new powers to impose financial penalties for offences under the Companies Act 2006 from 2 May 2024.
Although we don’t yet know how Companies House will use these powers, there is a real chance that indiscretions such as the late filing of a company’s Confirmation Statement which until now would go unpunished, will be met with standard financial penalties. It may be that Companies House adopts an approach similar to that of HMRC when dealing with the late filing of accounts.
The new powers are contained in the Economic Crime and Corporate Transparency Act 2023 (Financial Penalty) Regulations 2024 (the Regulations). The Regulations confer broad powers on Companies House to impose financial penalties as an alternative to criminal prosecution. In the past minor offences such as late filings would not have been considered for criminal prosecution. These same offences may now attract financial penalties.
The Regulations adopt a similar approach to that seen in the context of the new Register of Overseas Entities. Companies House may issue a warning notice explaining why it suspects an offence has been committed and give the recipient 28 days to make representations about their conduct. Practically this gives the recipient the opportunity to make amends and, for example, file the late paperwork to avoid a penalty.
If Companies House is not satisfied with the representations, then a penalty will be imposed. The penalty must not exceed the maximum fine for the offence in question and cannot exceed £10,000. An appeals process is provided for in the Regulations which requires the permission of the Court.
Given these new powers and the potential new financial penalties for not meeting obligations under UK company law it is all the more important that these requirements are monitored and filings made correctly and on time.
Our Annual Compliance Service is one of the ways we help clients to remain compliant throughout the year.
