The responsibilities of a director in a limited company includes ensuring that all company accounts and annual returns are submitted within the required timeline every year. For dormant companies, there is often very little to report. This however does not mean that a director does not have to continue with their obligations. Dormant company directors are also subject to penalties for missing deadlines.
Filing incorrect paperwork, missing the filing date or not filing at all can all be subject to penalties. Directors and/or companies can be fined up to £5,000 and have the company stricken from the register if Companies House does not receive annual accounts by the required deadline. In just one year, Companies House fined more than 140,000 companies, to the tune of nearly £68 million, all of which were imposed due to the late receipt of company accounts.
Filing annual accounts late qualifies as a criminal offense. Your company could potentially face a penalty and your director could face a non compliance penalty which could include fees of up to £5,000 as well as personal prosecution. The first time that your accounts are late or are not received at all, there is a fixed penalty. Note that the longer the accounts are late, the higher the fees will be. Penalties range from £150 for accounts that are one month late up to £1,500 if they are more than six months late. Also note that these fines are doubled when those accounts are late for two years in a row.
Your company’s confirmation statement must be updated regularly, and this is separate from your company accounts. You cannot assume that once your company’s accounts for a dormant company have been filed that your administration duties are over. Companies House sends out an email alert or letter by post when your confirmation statement is due. Even for dormant companies, this must be filled out and returned to Companies House by the deadline date. You have 28 days from the due date to get this in before you will face penalties.
There are instances where your late penalties can be removed if you file an appeal, but you should note that you have to have a valid reason for missing this date. With a dormant company, you are supposed to provide the same information each year. This makes it nearly impossible to prove that you have a valid reason for missing the deadline date for confirmation statements. You should begin to get these papers in order the instant that you receive the reminder from Companies House. Also, be sure that all of the included information is correct. Just one simple mistake could cause you to incur a fee.
Establishing a dormant company is a cost-effective way of keeping everything in place for when you are ready to trade as a limited company or sole trader. It can also help you to protect your business name. However, you must ensure that you are not reducing this cost effectiveness by incurring a penalty for something that you have control over. Be certain that you are submitting all your required paperwork for your company by the deadline provided each year.