
Companies House has recently published guidance on their approach to how and when they will use their enforcement powers to issue financial penalties under the Economic Crime and Corporate Transparency Act 2023 (Financial Penalty) Regulations 2024.
The guidance confirms that the Registrar of Companies is able to impose financial penalties on a person if satisfied beyond reasonable doubt that a person has committed an offence under section 1132A of the Companies Act 2006.
Depending on the offence, this can be a: –
- Daily rate penalty- a daily penalty for each day that the offence continues;
- Fixed penalty- a set amount penalty for each day that the offence continues; or
- a combination of a fixed penalty and daily rate penalty.
The guidance further sets out that if the Registrar suspects that a person has engaged in conduct amounting to a relevant offence, the Registrar may issue a warning notice in writing to that person. However, the warning notice must contain the following:-
(1) the grounds for suspecting that an offence has been committed.
(2) the period within which the person may make written representations to the Registrar about their conduct- at least 28 days beginning the day after the waning notice date.
(3) how to deliver a representation.
(4) a warning that at the end of the given period, the Registrar may impose a financial penalty.
If the individual who has received the financial penalty takes the required action within 28 days of the date of the warning notice, then no financial penalty will be imposed. Additionally, if a representation is made to Companies House within 28 days of the date of the warning notice, then no decision will be made about the offence and penalty until all information has been considered.
If after this period has elapsed, the Registrar is satisfied beyond a reasonable doubt that an individual has committed a relevant offence, a penalty notice may be issued. The notice must also be in writing and must set out: –
- the grounds for issuing the financial penalty
- the type of penalty (fixed, daily rate, or both)
- how the financial penalty is calculated
- for a fixed penalty, the amount of the penalty
- for a daily rate penalty, the amount of the daily rate, the day the amount started to accumulate and the day on which, or the circumstances in which, it stopped accumulating
- how to pay the penalty
- the period within which payment is to be made (not sooner than the end of 28 days beginning on the date the penalty notice is given)
- rights of appeal
- the consequences of not paying
Penalties are calculated based on the significance of the offence and whether the individual has committed repeated offences. The penalties range from £250 (for minor first offence) to £2,000 (for very serious offences committed by an individual for whom it is their fourth or more offence). If the individual fails to pay the penalty, then Companies House may issue further penalties. If the individual or their company commits the same serious offence three times in five years, then Companies House may consider prosecution.
The guidance also provides for information to appeal a penalty notice. The individual may (with the permission of the Court- appeal to the County Court (or Sherrif Court in Scotland). Appeals must be made within 28 days of the penalty notice and served on the Registrar within 7 days of the date on which permission was granted.
Appeals can only be made on the basis that the decision to issue the penalty was
- unlawful, irrational/unreasonable;
- made on the basis of a procedural impropriety; and
- otherwise contravenes the rules of natural justice.
If you have any questions regarding this article or about Companies House documents, please contact me, Manider Singh here.
Companies House approach to financial penalties
https://www.gov.uk/government/publications/companies-house-approach-to-financial-penalties/companies-house-approach-to-financial-penalties#financial-penalty-amounts