Farmers beware: Accounts penalties up 300%

FThe financial implications of the new Companies Act, which comes into full effect on 1st October, could have a serious impact on farming companies according to a West Norfolk accountant.

Chartered accountant Sharon Edwards, who specialises in corporate services at Mapus-Smith & Lemmon, said:

"The time limit for filing accounts has been reduced from ten to nine months after the year end for accounting periods beginning on or after 6 April 2008 and penalties have been substantially increased. While companies which justify full-time company secretaries or legal departments are most probably aware of this and all the other changes brought about by the Act, small farming companies may have overlooked the matter.

"Private company and LLP accounts which are filed late will attract a penalty of £150 – compared with the former fine of £100. A further fine of £375 will be incurred if the accounts are more than one month overdue. The previous regime did not introduce a further fine until the accounts were over three months overdue and then the fine was only £250.

"The fine levels continue to rise in increments up to £1,500 for accounts overdue by more than six months. This represents a 300% increase on the previous fine for filing accounts over six months late. If they are late again the following year then these penalties will double. These are significant amounts to bear, particularly for small businesses."

The Companies Act 2006 received Royal Assent on 8th November 2006 and effectively replaced existing company legislation by re-writing, updating and modernising company law. The changes have been implemented in a number of phases with completion by 1st October 2009.