Challenging Late Filing Penalties
December 10, 2019
The Penalty Regime
s.441 Companies Act 2006 provides a duty to file accounts and reports with the Registrar. A failure to file accounts and reports with the Registrar of Companies on time is a serious matter and will result in a civil penalty of up to £1500 (double if the failure is repeated in the following year) for private companies and significantly more for public companies. The worst offenders may also be prosecuted. In 2018 there were 223 000 late filing penalties issued. In 2016/17 (the latest year of available figures) the amount of penalty revenue recovered was £93.7M. It is likely to be higher still in 2019. Liability is strict and there is very limited discretion in respect of enforcement-R (oao) POW Trust v Registrar of Companies (2004) BCC 268.
Strike Out Application CPR 3.4(2) (b)
Most penalties are paid without the necessity for court action and where claims are issued they are rotuinely dealt with in bulk. Very occassionaly however court claims by the Registrar are subject to judicial scrutiny. In November 2019 I appeared in an interesting case on behalf of the Registrar- Registrar of Companies v Transcribe Ltd. T had been subject to penalties in the year 2011 which was the subject of a claim in 2018 at the County Court following non payment. The Claim was ultimately settled between the parties through a Tomlin Order. R subsequently issued further claims for penalties accruing for 2012-2014. It was not disputed that R could have issued the claims at the same time as it issued the claim for the 2011 penalty. T argued the subsequent claims should be struck out under the Rule in Henderson v Henderson as an abuse of process. If they had been issued at the same time, it was said, they could have all been resolved at the same time.
Decision of the Court
The application was refused by the District Judge. In summary (i) there was nothing to stop T from settling the 2012-2014 claims at the same time as it settled the 2011 claim. T was well aware of the claims when it settled the 2011 debt, albeit that no proceedings had been issued at that point. They could have been added to the Tomlin order which is a contract between the parties and is not limited to claims before the court in the claim form (ii) the rule in Henderson requires a ‘broad merits based approach’ and the court had to consider the nature of the claim which was public interest litigation by R. Applying Aldi Stores v WSP Group (2007) EWCA Civ. 1260 the Claims did not constitute harassment or oppression by R against T.
Challenging a late filing penalty is difficult and the best course is simply to file on time. Where there are exceptional circumstances companies may appeal to the Registrar against the penalty. An example given is an unforseen catastrophe strikes at a critical time such as a fire destroying records a few days before the filing deadline. Where there has been non payment of penalties over a number of years, there is no general requirement on the Registrar to issue a claim to recover all of the Penalties at the same time and the Registrar is generally entitled to recover different years penalties through separate proceedings.