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The number of UK companies filing their accounts more than six months late in consecutive years rose last year, pushing fines to record levels as companies struggled to put the pandemic behind them and reassure auditors of their financial health.
Figures produced by Companies House show that a record £34.4mn of fines were issued in 2023/24 to private companies that file early for two years in a row, up from £10.2mn in 2019-20.
The total number of companies charged in the top 3,000 for repeated filings more than six months late was 11,463 in 2023-24, compared to 3,418 in 2019-20.
Since the pandemic, companies have struggled with slow economic growth, high borrowing and energy costs, and rising wages. “Companies struggling post-Covid never get it,” said Johnathan Dudley, an accounting partner at Crowe.
Many businesses have struggled to prove to auditors that they have the financial strength to remain in business as a “going concern,” Dudley said, contributing to delays in filing accounts.
Private companies are penalized at Companies House for filing their accounts late, and eventually the money is paid to the Treasury. Penalties range from £150 for those who file within the prescribed month, to £3,000 for those who file more than six months late in two consecutive financial years.
The number of £150 fines has fallen significantly since the 2021-22 peak, but long-term filing delays have continued to rise.
In total, Companies House has collected £785.2mn in fines from all private and public companies that have filed their accounts late since 2018-19, according to a parliamentary inquiry by. Labor MP Phil Brickell.
Craig Beaumont from the Federation of Small Businesses said: “We know that some small firms are heavily indebted with pre-pandemic trade debts and (Covid-era) loan repayments.”
The bounce back loan (BBL) scheme was launched in May 2020. We targeted the smallest businesses, offering loans of up to $50,000 – or 25 percent of annual turnover – to help them stay afloat during the pandemic.
Dudley noted that not being filled by “ghost companies” created during the pandemic to secure loans may explain some of the increase.
Up to 47bn of bounce back loans were issued, without mandatory credit checks for borrowers. The government has provided a 100 percent guarantee on the loan if businesses cannot repay it.
The House of Commons Public Accounts Committee estimated in April 2022 that up to £17bn of defaulted loans would never be recovered, with £4.9bn lost to fraud.
Brickell, a member of the All Party Parliamentary Group for Anti-Corruption and Responsible Tax said: “Companies House must ensure that the filing deadline does not continue to be challenged 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 an Anti-Covid Commissioner to review Covid spending.
“We will use all means to recover public money lost to fraud related to the pandemic.”