Why company records needn’t be a nightmare

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This article was written before 30 June 2016, when the annual return was replaced by the confirmation statement. Like its predecessor, a confirmation statement must be filed at least once a year by all UK companies.

To find out more, check out our guide to the confirmation statement.

We know many people find managing their company records a spine-chilling business. As it’s Hallowe’en, sit down with us next to the camp fire and we’ll share some scary tales about what can happen if things go wrong – but also offer tips on how you can easily avoid your company being part of a horror story.

“My annual return is overdue, I’m getting warnings letters from Companies House and I don’t know how to complete it!”

If you just ignore it, there’s a scary Hallowe’en tale in the making. It’s a criminal offence to fail to deliver the annual return within 28 days of the legal return date and directors and company secretaries can be prosecuted for that failure. A conviction means a criminal record and a fine of up to £5,000: in some cases, you may also be disqualified from acting as a company director in future.Although Companies House prosecutes in about 1,000 cases each year, the more likely and equally spine-chilling outcome is the company being struck off the company register – they’ll assume that no filings means the company is no longer in operation, strike the company off and you’ll then find bank and other accounts being frozen – and need to go through a time consuming procedure to restore the company again.Thankfully, you should get several warning letters before Companies House pursue an action to strike off the company. But don’t put it off – as you’ll have to do it sooner or later. If this is your first annual return or you’ve had a bad experience in the past, exorcise your demons using our simple step by step wizard to complete your return. We pull in all the available information directly from Companies House so you only need to update with any changes since the last return or, if you’ve not completed one yet, from the date you formed the company.

“My company’s been charged a penalty for late filing!”

Fines and penalties can strike fear into the heart of any business owner – and with good reason. Since they’re usually avoidable with some proper planning, they’re a completely useless drain on resources and cashflow. That cash could be put to so much better use in building your business than stuffing the coffers of government bodies. They may also point to wider problems with your company processes that will need attention to avoid a repetition.Managing your company records properly is not exempt from the threat of penalties. In 2012/13, Companies House imposed over 166,000 penalties to a value of £84,000,000. Fines start at £150 but the longer a document is overdue, the higher the fine could go – if your private company accounts are more than six months late, for example, the fine could be £1,500. For those who repeatedly file late, penalties are generally doubled. Here’s our simple tips to avoid a late filing penalty:
  • Get ready early rather than leaving it until the witching hour – particularly if the accounts or other returns you need to submit are the first you’ve submitted.
  • Know your deadlines. Keep a diary note of when things are due or sign up to a free records management service like Inform Direct which will help you manage key deadlines and send you email reminders as they approach.
  • If you’re filing by post, allow enough time for documents to reach Companies House. Generally, if a filing deadline expires on a Sunday or Bank Holiday, documents like your accounts are still due on that date rather than the next working day afterward. Remember that first class post does not offer any guarantee of next day delivery.
  • Don’t think you can rely on any excuse to avoid a penalty. Companies House have heard most of them before and take quite a narrow view of the circumstances where they’ll be tempted to give you the benefit of the doubt. In particular, the fact that another director or your accountant was going to submit the forms will usually not mean you automatically escape a penalty.

“I’m scared that someone might fraudulently take control of my company!”

Most people are aware of personal identity fraud and take reasonable steps to guard against it. But a surprising number of small business owners treat the prospect of corporate identity theft in the same way you might treat an exaggerated “ghost” story – but it does happen.Corporate identity theft involves stealing the details of a business. Fraud may then be carried out in the name of the company and its existing directors. In some cases, the entire business could be stolen with addresses and officers being changed by fraudulent filings with Companies House. Even if you can regain control of the company, you could lose a lot of money and customer relationships in the process. And it’s a growing problem: according to Companies House estimates, around 100 instances of corporate identity fraud occur each month.We’d suggest the following to help reduce the risk of corporate fraud, and particularly fraudulent filings being made to Companies House for your business:
  • Implement a clear desk policy and shred unwanted sensitive company documents.
  • Think about the security of your IT systems – consider getting the advice of an expert.
  • Restrict access to sensitive company information to those who really need it.
  • Don’t give out blank letterhead paper that could be used for fraudulent purposes.
  • Wherever possible, make Companies House filings electronically rather than on paper – thereby reducing the risk of information being intercepted
  • Make use of an electronic service like Inform Direct where you can see the information held at Companies House and be alerted when paper or electronic filings are made for the company
  • Consider changing your six character company authentication code – used for Companies House filing – to something secure. A code of “123456” might be easy for you to remember but it’s also simple for a potential fraudster to guess!
  • Business identity protection insurance can cover your business against customer and supplier identity fraud, account takeover, and other fraud committed through business identity theft.

“Managing my company records is a nightmare. I just don’t have the time to look after all these records and now they’re all out of date!”

At Inform Direct, we hear this scare story a lot. Particularly for those who are new to running a company or companies with lots of shareholders, there can be a baffling array of shareholder detail changes to process, registers to update and filings to make with Companies House. Most people don’t claim to be company secretarial experts and, quite frankly, when there’s a business to run it usually feels that there’s better things to do.However, keeping those records up to date is an important task. As well as the fines and other penalties we’ve talked about above, failing to keep registers up to date can in itself incur a penalty of up to £5,000 and then a daily default fine for continued failures. Alongside this, it can make the company look unprofessional where a shareholder asks to see these company documents and they’re not available – or they check the information available via Companies House and find that it’s out of date.We think we’ve got the perfect solution to exorcise these demons. Inform Direct, our free company records management tool, will:
  • Let you easily update shareholder, director and company details
  • Offer you tailored help on what information you need to record
  • Once you’ve updated details, make any necessary Companies House filings automatically
  • Automatically update a full suite of electronic company registers
  • Save all the changes you make so you don’t need to re-enter information again later for your Annual Return.
If you’ve got skeletons in your company records closet, register with Inform Direct and clear them out today! Happy Hallowe’en!

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