UK businesses handed out record fines for late filing of accounts

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The number of UK companies filing their accounts more than six months behind schedule rose last year, forcing fines to be reported as companies struggle to contain the outbreak. this behind and convince auditors of their financial health.

Figures released by Companies House show that a record $34.4mn in fees were paid out in 2023/24 to private companies filing deeply for two years in a row, up from $10.2mn in 2019 -2020.

The total number of companies charged $3,000 for filing more than six months late was 11,463 in 2023-24, compared to 3,418 in 2019-2020.

Since the pandemic, companies have been struggling with slow economic growth, high borrowing and energy costs, and rising wages. “Companies struggling after Covid haven’t quite caught up,” said Jonathan Dudley, a partner at accountancy firm Crowe.

Many businesses were struggling to prove to auditors that they had the financial strength to stay afloat as an “ongoing concern”, said Dudley, contributing to delays in filing counter.

Private companies are subject to penalties from Companies House if they lodge their accounts late, and the amount is ultimately paid to the Treasury. Grants range from £150 for those who have contributed within a month of the set period, to £3,000 for those who contribute over six months over two consecutive financial years.

The number of £150 fines has fallen significantly from the peak in 2021-22, but long delays in filing are increasing.

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

Craig Beaumont of the Federation of Small Businesses said: “We know that some small firms have a lot of pre-crisis debt and (Covid-era) debt recovery.”

The bounce back loan (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 profits – to help them stay afloat during this pandemic.

Dudley noted that the reluctance of “ghost companies” established during the pandemic to accept late loans may explain some of the increase.

Up to £47bn of bounce back loans have been issued, with no mandatory credit checks for borrowers. The government provided a 100 percent guarantee for loans if businesses were unable to pay.

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

Brickell, a member of the All Party Parliamentary Group for Anti-Corruption and Responsible Taxation said: “It must be ensured that the House of Companies ensures that filing deadlines do not continue to be undermined at the alarming rate we are currently seeing.

A government spokesman said: “This government is committed to protecting the interests of taxpayers, which is why we have appointed the Covid Counter-Fraud Commissioner to monitor the use of Covid money.

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