Reducing the risk of accounts being rejected by Companies House
Susan Cattell, Head of Taxation (England and Wales), outlines the key points from a recent Talking Points webinar in which Companies House highlighted the main reasons why accounts are rejected and ways of reducing the risk of rejection.
How many rejections are there?
Last year (to March) Companies House received over 2.7 million sets of accounts. This year it expects to receive 2.9 million. Unfortunately, 88,000 accounts were rejected and some were rejected more than once. This does not represent a large percentage of the total accounts submitted but rejection causes problems for companies and advisers.
Late filing penalties
One big risk arising from a rejection, particularly close to the filing deadline, is that the accounts will then be filed late giving rise to a late filing penalty. In the year to March 2016, 195,000 penalties were issued amounting to £92m. Apart from the financial cost, late filing penalties may adversely affect how credit reference agencies rate a company.
What are the main reasons for rejection?
Approximately 20% of rejected paper accounts relate to missing signatures. Filing online removes the need for an actual signature (a pin code is used instead) and individual signatures do not appear on the public record.
The company name and number must be exact. With 3.7 million companies on the register the differences between some names may be minimal. Ten percent of rejected paper accounts are rejected because of an incorrect name.
Surprisingly, some accounts are rejected because the accounting reference date given is not the same as the date on the record. This can be checked via the Companies House service before preparing accounts. It is also possible to sign up to the email reminder services – reminders can be sent to agents if required.
Submitted accounts must also give the correct exemption details.
Reducing the risk of rejection
The rejection rate for accounts filed on paper is 6% compared to 2% for accounts filed via software and 0.3% for web filing (for the smallest companies). The lower rejection rate for web filing is partly because fewer account types can be sent in this way and a great deal of validation is built in.
Apart from the lower rejection rate, the Companies House speakers were keen to emphasise some other perceived benefits of digital filing under the headings of security, accuracy, speed and cost. If digitally filed accounts are rejected the company or their agent will also find out more quickly – with more chance of re-filing correct accounts before the deadline.
The speakers noted that paper filing already accounts for the minority of filings. Last year around 75% of all accounts for small and micro companies were filed online and from April to August 2016, 80% were filed digitally.
Listen to the webinar
Future HMRC Talking Points webinars
HMRC regularly runs Talking Points webinars designed specifically for tax agents; they include presentations from HMRC and other relevant experts, and interactive Q&A sessions with agent participants.
For details of forthcoming Talking Points (including those listed below) and to register to attend, go to the HMRC Talking Points page.
Topics announced for January 2017 include:
- Trade losses
- Self-Assessment tax returns
- Debt management
- Capital allowances and vehicles
- Basis periods
Get in touch if you have any feedback on any HMRC Talking Points sessions.