Companies House introduces new non-compliance penalties 

New measures introduced in the Economic Crime and Corporate Transparency Act 2023 and supplementary regulations give Companies House greater powers to tackle breaches of company law. This includes the power to impose non-compliance penalties on companies and duty holders (e.g. directors) who commit relevant offences under the Companies Act 2006.

New role and powers of Companies House

Companies House, the UK registrar of companies, is responsible for maintaining the public register of companies in England and Wales, Scotland, and Northern Ireland.

To improve the quality of this register, the Economic Crime and Corporate Transparency Act 2023 requires Companies House to promote the following objectives:

• ensure that anyone who is required to deliver a document to the registrar does so (and that the requirements for proper delivery are complied with)
• ensure that the register contains all of the necessary information and that it is accurate
• minimise the risk of records kept by the registrar creating a false or misleading impression to the general public
• minimise the extent to which companies and others carry out unlawful activities, or facilitate the carrying out of unlawful activities

Companies House uses various methods to promote these objectives and help businesses comply with their statutory obligations, including providing advice and published guidance. 

Where non-compliance or breaches of the law occur, the registrar has the power to use the following enforcement methods in line with its new enforcement policy:

• issue financial penalties
• pursue civil actions (e.g. court ordered filing of documents)
• pursue criminal prosecutions
• ask the courts to disqualify people from acting as company directors
• refer cases to other agencies (e.g. the Insolvency Service)

To support these new powers, Companies House has developed a compliance framework for assessing levels of compliance and deciding how to respond to perceived breaches. The levels are as follows:

Level 1: Compliant – no effort is required

The company or duty holder:

• always files early or on time (including filings relating to changes in the company – e.g. a new registered office address or director)
• uses information published on the Companies House website or seeks professional advice if they need guidance

In this situation, no non-compliance penalties will apply. Companies House will consider monitoring activity and intelligence, in addition to sending automated email reminders when filing deadlines are approaching. 

Level 2: Compliant with support – minimal effort is required 

The company or duty holder:

• occasionally fails to file on time
• seeks clarification in an attempt to avoid mistakes
• has a complete filing history with no apparent gaps in filings
• brings company records up to date when prompted to do so (i.e. after receiving a reminder or default notice from the registrar)

In this situation, Companies House will consider (in addition to level 1 actions):

• providing support and guidance through its website or efficient contact methods such as web chat, guidance aimed at new directors, webinars, podcasts, or the company’s registered email address
• applying penalties for the late filing of annual accounts
• issuing default statutory notices

Level 3: Disregard for compliance  – considerable effort is required

The company or duty holder:

• cuts corners
• fails to comply with most filing deadlines
• makes errors due to a lack of understanding (may include inconsistencies)
• has a largely complete filing history with some gaps in filings
• only tends to be compliant and bring company records up to date when compelled to do so (i.e. after receiving a default notice or threat of prosecution)

In this situation, Companies House will consider (in addition to levels 1 and 2 actions):

• targeting communications that set out previous non-compliance issues and the consequences of continued breaches
• making enquiries under part 35 of the Companies Act 2006
• using querying powers
• prioritising for prosecution of false filing offences
• annotating the public register to highlight the presence of misleading and inaccurate information
• using a court order to compel filing where there are gaps

Level 4: Non-compliant – significant effort is required

The company or duty holder:

• pays little to no attention to communications they receive from Companies House
• disregards their legal filing obligations
• regularly files late
• has a pattern of making inaccurate filings or statements (may include inconsistencies)
• has gaps in their filing history
• is wilfully non-compliant, failing to bring their records up to date when prompted to do so
• walks away from the company

In this situation, Companies House will consider (in addition to level 3 actions):

• prioritising for prosecution
• applying to the courts to disqualify an individual from being a director
• obtaining default orders through the court to compel filing
• prosecuting for false filing offences
• using financial penalties
• striking the company off the register

Level 5: Seriously or serially non-compliant – very significant effort required

The company or duty holder:

• pays no attention to communications they receive from Companies House
• shows disregard for filing obligations
• has a significant history of late filing, inaccuracies, or both
• displays a pattern of making inaccurate filings or statements (may include inconsistencies)
• has significant gaps in filing history
• is wilfully non-compliant, failing to bring their record up to date when prompted to do so
• walks away from the company (and may have a pattern of such actions)
• has a pattern of non-compliance across multiple company records

At this level of non-compliance, Companies House will consider imposing any and all sanctions against the company and the people responsible for running it. 

The new non-compliance penalties 

Under the Economic Crime and Corporate Transparency Act 2023 (Financial Penalty) Regulations 2024, Companies House has the power to impose financial non-compliance penalties on any person (a company or individual) whose conduct amounts to a relevant offence under section 1132A of the Companies Act 2006.

Depending on the particular offence, the penalty may be one of the following:

• fixed penalty – a set amount based on the specific offence, previous behaviour, and other factors
• daily-rate penalty – a daily penalty charged for each day that the offence continues
• combination of a fixed penalty and daily-rate penalty

Where a relevant offence is suspected, the registrar may issue a written warning notice to that person. They will have 28 days (beginning the day after the date on the warning notice) to either:

• take the required action (e.g. filing an overdue confirmation statement) 
• make a representation to explain any information they’d like Companies House to consider

If the person takes the required action to rectify the non-compliance issue within the 28-day period, they won’t receive a penalty.

However, where no action is taken and/or Companies House is satisfied that the person has committed a relevant offence, a written penalty notice may be issued. This will outline the following:

• grounds for the financial penalty
• penalty type (i.e. fixed, daily rate, or both)
• how it is calculated
• the amount of the penalty
• how to pay the financial penalty
• when payment is due
• rights of appeal
• consequences of not paying

If the penalty is not paid within 28 days of the penalty notice date, Companies House may try to recover payment through a debt collection agency or the court.

How Companies House calculates non-compliance penalties

Companies House calculates non-compliance financial penalties based on the severity of the relevant offence and how many times the person has committed offences of the same (or similar) kind in the last five years.

These financial penalties are an alternative to prosecution. As such, they are similar to the fines that a court may impose.  

Based on the standard scale of fines for summary offences, Companies House considers:

• level 3 offences to be minor offences
• level 5 offences to be serious offences
• ‘either way’ and imprisonable offences to be very serious offences

The financial penalty amounts for these offences are as follows:

How to avoid non-compliance penalties 

You can avoid non-compliance penalties by staying up to date with changes to UK company law and completing all filing and reporting responsibilities for Companies House. These include:

1. Maintaining statutory registers 

Companies must keep accurate and up-to-date statutory registers, including a register of members. You must make these records available for public inspection at your company’s registered office address or SAIL address.

2. Preparing an annual confirmation statement

Companies must prepare an annual confirmation statement at least once a year. This filing confirms that the company information on the public register is correct and up to date.

3. Submitting annual accounts 

All companies, including dormant companies, must prepare and deliver annual accounts to the registrar each year. The filing deadline is 21 months after incorporation (first accounts), then 9 months after the company’s accounting reference date (ARD) for all subsequent accounts.

4. Reporting changes 

You must notify Companies House if there are any changes to your company, including the following:

• company name
• registered office address
• the use of a SAIL address (single alternative inspection location)
• location of company registers (e.g. moving them from the registered office to a SAIL address)
• appointment or removal of a director or company secretary
• change of personal details relating to an existing director or company secretary
• information about people with significant control (PSCs)
• change of accounting reference date
• changes to the company’s share structure (e.g. issuing new shares or transferring shares)

You can report these changes using the Companies House online service or by post. Alternatively, you can use the Rapid Formations Online Client Portal.

Compliance help from Companies House

Companies House provides various resources to help individuals and organisations stay compliant. These include:

• an email reminder service to tell you when your company’s annual accounts and confirmation statements are due
• free  interactive webinars
• online  guidance for companies
• using contacts in professional bodies
• a contact centre where you can find support and advice

At Rapid Formations, we also provide a Full Company Secretary Service to assist directors with their statutory filing and reporting requirements for Companies House. This all-inclusive service is available to existing clients and new customers for only £149.99 per year.

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