UK businesses issued with record fines for filing accounts late

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The number of UK firms filing their accounts more than six months late in a row rose last year, pushing fines to record levels as firms struggled to put the pandemic behind them and convince auditors of their financial health.

Figures produced by Companies House show a record £34.4mn in fines were issued in 2023/24 to private firms that filed late two years in a row, up from £10.2m in 2019-20.

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

Since the pandemic, companies have struggled with slower economic growth, higher debt and rising energy costs and wages. “Companies struggling post-Covid haven’t really gotten over it,” says Jonathan Dudley, partner at accounting firm Crowe.

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

Private companies are hit with fines from Companies House if they file their accounts late, ultimately paying the Treasury. Penalties range from £150 for those who file within one month of the deadline to £3,000 for those who file more than six months late in two consecutive financial years.

The £150 fine figure has fallen significantly from the 2021-22 peak, but longer filing delays continue to increase.

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

Craig Beaumont of the Federation of Small Businesses said: “We know that some small firms are heavily indebted to pre-pandemic commercial loans and [Covid-era] Debt Bounces Back.”

The Bounce Back Loan (BBL) scheme was launched in May 2020. It targets the smallest businesses, offering loans of up to £50,000 – or 25 per cent of annual turnover – to keep them afloat during the pandemic.

Dudley noted that non-filing by “ghost companies” formed during the pandemic to receive bounce back loans may explain some of the rise.

Bounce back loans of up to £47bn have been issued without mandatory credit checks for borrowers. The government provides a 100 percent guarantee for loans if businesses can’t repay.

The House of Commons Public Accounts Committee estimated in April 2022 that up to £17 billion of bounced back loans would never be recovered, with £4.9 billion lost to fraud.

Brickell, a member of the All Party Parliamentary Group for Anti-Corruption and Responsible Taxation, said: “Companies House must ensure that filing deadlines do not continue to be breached on the alarming scale we are currently seeing.”

A government spokesperson said: “This Government is committed to protecting the interests of taxpayers, which is why we have appointed a Covid Counter-Fraud Commissioner to scrutinize Covid spending.

“We will use all possible means to recover public money lost to pandemic-related fraud.”