Consequences of missing the annual return filing date
If you miss the filing date for your company:
- the company must pay a late filing fee that accrues on a daily basis until the return is filed;
- the company loses any audit exemption for its financial statements that it was claiming for a two year period;
- the company is at risk of prosecution (the directors are also at risk of prosecution as the failure is a category 3 offence), involuntary strike off and being dissolved if it has a history of missing the deadlines or failing to file returns.
Late filing fees:
A fee of €100 is imposed for missing the deadline and a further €3 is added for each day the return remains outstanding subject to a maximum fee of €1,200.
The Companies Registration Office website contains a late penalty calculator in case you need to calculate them.
Loss of audit exemption
You may be in the fortunate position that your company qualifies for an audit exemption. However if you miss the annual return filing date you lose the audit exemption for a two year period. Read more about audit exemption.
Prosecution
The Registrar of Companies can apply to the High Court to compel a company to make the filing (and seek costs for making the court application) or issue an on the spot fine for the failure which requires that the annual return be filed and the fine be paid within a 21 day period or risk prosecution.
The company and the directors are at risk of prosecution as the failure to file an annual return is a category 3 offence. If convicted the company and directors are exposed to a fine of €5,000 (class A fine) and or 6 months imprisonment. It is a summary offence in the District Court.
If a director is convicted of a number of offences the director is at risk of being disqualified from acting as a director for persistent default (3 or more defaults).
Involuntary strike off or dissolution
Failure to file an annual return puts a company at risk of involuntary strike off and dissolution. The Companies Registration Office must provide only one statutory warning to a company before it can take action to strike off and dissolve the company for failure to file an annual return.
How to minimise these negative consequences?
1. Apply to court for an order to extend the time to file the annual return.
The company can, since the commencement of Companies Act 2014 in June 2015, apply to court (either the District Court in the district where the company has its registered office or the High Court) to extend the filing date so that the company gets more time to make the filing without losing the audit exemption and having to pay the late filing fees.
An affidavit must be completed explaining why the return is late and why an extension should be granted.
You must notify the Registrar of Companies that you are making the court application.
The criterion that the court uses to decide whether to grant the extension is “if it is satisfied that it would be just to do so”.
2. Deliver a certified copy of the order on the Registrar of Companies
If you obtain the court order granting an extension, you must within 28 days (unless the court permits a longer time period) deliver a certified copy of the order to the Registrar of Companies.
Failure to meet this requirement invalidates the order.
3. Make the filings within the specified extended time period.
You only get one opportunity to obtain the extension for each late annual return.
If you fail to file the return and financial statements within the extension granted then you cannot go back to court to seek a further extension.
Therefore you should ensure that you can make the filing within the court ordered extension date and be able to explain to court why you need time to be in a position to make the necessary filings.
If you file within the extended deadline you do not have to pay the late filing fees and the company gets to retain the audit exemption.
If you require any assistance or require further information please contact us.
Disclaimer
The material in this article is for general information purposes only and does not constitute legal or taxation advice. Specific legal and taxation advice should be sought before acting. All information and taxation rules are subject to change without notice.
No liability whatsoever is accepted by M. McLoughlin & Co. for any action taken in reliance on the information in this article