Companies House Late Filing Penalties: Legalised Extortion

Companies House

Companies House

According to Katy Wilkinson, a Paralegal dealing with ‘Complex Litigation’ and representing The Registrar for Companies for England and Wales, says that the “Late Filing Penalty”, levied upon companies when an Annual Accounts, Annual Report and other filings are either not filed or filed late, is a mechanism used by The Registrar to “ensure all companies are treated the same”.

Wilkinson, who works for Optima Legal, a division of Capita plc, wrote that her client was unable to consider any mitigating circumstances and denied that The Registrar for Companies was practicing what amounted to an abuse of process.

But dormant companies, of which there are many tens of thousands incorporated in England and Wales, oftentimes inadvertently fail to file their annual accounts or other reports. Dormant companies pay no tax and there is no fee payable for filing the relevant form, but some directors are either not notified by their registered agent or reminders are sent to an old email address, leaving the company open to a Late Penalty of £150.

Despite this, Wilkinson’s claimed that the Penalty process is designed to treat all companies the same, but that isn’t true.

Each year, The Registrar for Companies uses its discretion to grant a wavier to the Penalty and many thousands of companies are not compelled to pay… In other words, the decision whether or not a company pays the Penalty is an arbitrary decision and will depend on a number of factors, including who makes the decision, how many waivers have been granted during the relevant period and the company’s historical filing pattern.

The Penalty, when levied against companies that owe no tax and would otherwise owe nothing had the online form been filed in time; reporting no business, no sales, no activity of any time, represents an extortionate ‘back-door’ tax on companies that is punitive in nature. The Registrar and its agents’ attempts to collect such a Penalty is nothing short of an abuse of power.