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The number of British companies that filed their accounts more than six months late in consecutive years rose last year, pushing fines to record levels as companies struggle to put the pandemic behind them and convince auditors of their financial health.
Figures from Companies House show that a record £34.4 million in fines were issued in 2023/24 to private companies that made serious late applications two years in a row, up from £10.2 million in 2019-20.
The total number of businesses fined a maximum of £3,000 for repeated lateness of more than six months was 11,463 in 2023-24, compared to 3,418 in 2019-20.
Since the pandemic, businesses have been struggling with slowing economic growth, rising borrowing and energy costs, and rising wages. “Businesses struggling post-Covid never get over it,” said Jonathan Dudley, a partner at accounting firm Crowe.
Dudley said more companies were struggling to prove to auditors that they had the financial strength to survive as a “going concern”, which contributed to delays in filing accounts.
Private companies are subject to penalties from Companies House if they are late in filing their accounts, with the money eventually being paid into the Treasury. Fines range from £150 for those who submit their application within a month of the deadline, to £3,000 for those who submit their application more than six months late in two consecutive financial years.
The number of £150 fines has fallen significantly since the peak in 2021-22, but longer application delays have continued to rise.
In total, Companies House has collected £785.2m in fines from all private and public companies that filed their accounts late since 2018-19, according to a parliamentary question it asked. Labor MP Phil Brickell.
“We know some small businesses were burdened with business debt before the pandemic and (COVID-era) loans are bouncing back,” said Craig Beaumont of the Small Business Federation.
The Bounce Back Loan (BBL) scheme was launched in May 2020. It targeted small businesses, offering loans of up to £50,000 – or 25 per cent of their annual turnover – to help them stay afloat during the pandemic.
Dudley noted that “shell companies” formed during the pandemic not applying for bounce-back loans could explain some of the rise.
Up to £47 billion of bounce-back loans were issued, without mandatory credit checks for borrowers. The government provided a 100 percent guarantee for the loans if companies were unable to repay.
The House of Commons Public Accounts Committee estimated in April 2022 that up to £17 billion of bounced loans would never be recovered, with £4.9 billion lost to fraud.
“The Corporations Council must ensure that application deadlines do not continue to be breached on the alarming scale we are currently witnessing,” said Brickell, a member of the All-Party Parliamentary Group on Anti-Corruption and Responsible Taxation.
A Government spokesperson said: “This Government is committed to protecting the interests of taxpayers, which is why we have appointed a Covid Fraud Commissioner to audit Covid spending.
“We will use all possible means to recover public funds lost in fraud related to the pandemic.”
