Late company account filing penalties have soared since financial crisis, experts say

Corporate law experts at the firm said that the sharp increase was due to a more stringent penalty regime begun by Companies House in 2009, combined with increasingly complex accounting requirements introduced following the crash.

Martin Webster of Pinsent Masons said that companies were becoming increasingly concerned by the burden of complying with UK regulatory requirements. Smaller companies in particular were struggling to meet Companies House deadlines, he said.

"High standards of transparency are one of the defining characteristics and main attractions of UK Plc," he said. "The question now must be whether a more appropriate balance can be struck between corporate bureaucracy and targeting those who disregard the rules."

"It is right and proper that there should be a clear focus on accurate and timely reporting. Particularly during a time of financial difficulty investors, customers and suppliers need a clear picture of the entity they are doing business with. But these new rules are hitting SMEs the hardest as they struggle to cut through red tape and an onslaught of new regulation," he said.

The Government has recently begun work on a number of initiatives aimed at improving business transparency. It is currently consulting on new measures that will require companies to disclose their true beneficial owners to Companies House, as well as new corporate social responsibility measures. In addition, new rules on directors' reports and board remuneration will be introduced from 1 October.

More stringent late filing penalties were introduced by Companies House in 2009, just as both public and private companies began to feel the impact of a reduced time frame in which documents must be submitted to the registrar. Penalties now increase for companies who file more than one month late, while Companies House can now multiply any outstanding penalties issued to companies that consistently file annual accounts after the deadline.

"Unlike large scale companies, capacity is an issue and it's unsurprising that smaller companies fail to hit Companies House deadlines and then suffer the consequences with increasingly costly fines," Webster said.

According to figures obtained by Pinsent Masons, late filing penalties issued to businesses across the UK rose from £53 million in financial year 2007/08, to £82.3m in 2012/13. This amounted to a 55% increase over the time period. In Scotland, the value of penalties collected increased by 75% in this timeframe compared with 54% in England and Wales, Webster said.

However, there was a slight decrease in the amount collected by the registrar in the first three months of the current financial year. Companies were fined a total of £20.1m compared to £20.6m over the same period last year, according to the figures.