€100 MILLION IN PENALTIES

The Companies Registrations Office (CRO) announced that since October 2001 over €100 million has been taken in late filing penalties, Linda Pearson reports.

At the end of 2006 the figure for late filing penalties had reached €102.5 million. An annual return is a document setting out certain prescribed company information which is required to be delivered by a company, whether trading or not, to the CRO once at least in every calendar year. Audited accounts must also be attached to the annual return.

“We’re very strongly opposed to receiving this money and we have to maintain our target of getting rid of it,” said Paul Farrell, Companies Registrar. “It’s still our ambition to get to zero but with the continued flows of late filing money coming in we don’t seem it be succeeding in that as much as we’d wish. ”

SUBMITTING ON TIME

The annual return of a company is required to be made up in every year to a date which is not later than its Annual Return Date (ARD). Every company in existence on 1 March 2002 was assigned its own ARD by law. New companies incorporated on or after 1 March 2002 have an ARD triggered by their date of incorporation.

According to Farrell it’s not hard for company directors to submit their annual returns on time and consequently avoid being penalised. “It is easy for company directors to avoid paying late penalties by having their accounts prepared and their annual returns filed on time. It can often be a matter of companies making sure their accountant is on top of the case, as most businesses use accountancy firms to look after their accounts,” said Farrell.

MISSING A DEADLINE

If a company misses the deadline for filing their returns, they can be penalised in several ways. “If a company is a day late filing their annual returns they pay a €100 fine and for each day after that its €3, which amounts to €1,200 per annum that they have to pay,” explains the Companies Registrar.

In addition, an on-the-spot fine may be imposed by the CRO where the company has a record of persistent late filing. Fines can be imposed on a conviction for breach of the annual return filing requirements. A company may be struck off the register and dissolved for failure to file an annual return.

In addition an application may be made to the High Court by the Director of Corporate Enforcement for an order disqualifying the company’s directors from acting as director or having any involvement in the management of any company, together with an Order for the legal costs incurred by the Director in bringing such an application and the costs incurred by him in investigating the matter.

REMINDING TO FILE ON TIME

In 2004, the CRO introduced the Integrated Enforcement Environment (IEE) which targets those companies that repeatedly fail to file annual returns on time. And in 2006, the CRO reduced the period between a missed annual return and the commencement of the strike off procedures against out of date companies thus ensuring that they do not run up sizable penalties while filing as late as possible.

Company directors are notified of the Annual Return Date (ARD) by letter four weeks in advance. They have a further 28 days from the ARD to file their returns. The CRO takes the further precaution of running advertising campaigns in national newspapers in the run up to the two heavy filing periods in October and February to remind company directors of their obligations.

Despite the large amount of money received for late filings, Farrell says the majority of companies file on time. “This is not a large percentage of companies who are getting penalties for late filing. The reality is that at the end of the 2006 88% of companies are up to date.”

COMPANY DIRECTORS

In the coming year the CRO plans on targeting company directors directly when reminding them of the need to file on time.

“In 2007 we’re very much going to focus on company directors. We usually write to directors via their company but this year we’re going to write to directors at their home address and draw their attention to the need to file on time,” said Farrell.

“We also issue a campaign letter twice a year so we’re constantly trying to remind directors of the requirements.”