You’ve decided to set up a limited company. Presumably you haven’t entered into this lightly and have taken advice on the requirements needed by the Companies Registration Office (CRO) and the Revenue from an accountant. This post is explaining the possible ramifications of late filing of the company’s Annual Return and accounts in Ireland. If you wish to know more in-depth information about the Annual Return and accounts then please use this link to the CRO http://www.cro.ie/ena/annual-return.aspx
As usual the company accounts have been put on the back burner. “So….we’ll get them in a few weeks late, they’ll be in so what’s the big problem?” Why should the butcher, baker, candlestick maker understand the intricacies of accounts and the Annual Return?
The Annual Return provides details of your business to the CRO including your accounts. The required detail of the accounts depends on the turnover. And by way of the name the Annual Return does have to be provided once every year.
NARD – Next Annual Return Date. This is the name of the letter you’ll get sent by the CRO to remind you to file your Annual Return. It’s best not to ignore this date.
A new company’s first Annual Return Date (ARD) is six months after the date of incorporation of the company and no accounts need to be filed with the first return. Normally the ARD is the same date every year thereafter unless the company has applied to change the date. It can be no later than nine months after the company year-end though as the accounts attached must not be older than nine months.
If you don’t file on time these are the possible consequences:–
– Late filing penalty
– Loss of audit exemption
– Prosecution of directors
– Company strike off
A late filing penalty of €100 is applicable the day after the filing deadline which is 28 days after the Annual Return Date. Thereafter there is a €3 daily charge until the return is filed. The maximum penalty is €1200 and none of it is tax deductible.
Your company accounts will have to be audited. This can prove to be expensive as not only the accounts you are submitting will now have to be audited but also your next year’s accounts too. An audit charge starts at around €1000 depending on the turnover, the state of the accounts and the work needed by the auditor to sign off that they have been prepared correctly. An audit exemption exists for most SME’s as one of the criteria is the turnover must not exceed €7.3Million. For a full list of the criteria please use this link http://www.cro.ie/en/annual-return-audit-exemption.aspx
If the company has a record for late filing the CRO may impose an on-the-spot-fine and/or summary prosecution of the company and/or the director(s) at fault. These fines can be up to €1904.61.
Also a company may be struck off the register and closed down for failing to provide an Annual Return. The assets of the company then become vested to the Minister for Finance and the owners will become liable for any further debts if the company continues to trade. The directors may be stopped from acting as a director by the High Court if the company was struck off with outstanding debts.
There are circumstances when the CRO will accept late filing and waive the penalty:-
– Force Majeure. Basically if something really bad has happened to one of the directors around the time of filing. Like a death or family bereavement or medical emergency. Or possibly something completely out of the control of the company. They will require independent documentary evidence.
– Not for Profit Companies for the benefit of the whole community and charities are allowed to file late.
– Delay/Non Delivery of documents posted to the CRO. In this case you must provide independent documentary evidence than it was posted with enough time to reach the CRO, for example An Post’s Express Service.
Requests to waive the late filing penalty must be made in writing to the CRO. If you have received one waiver you are not entitled to receive another. Please note that although it may be accepted that your late filing penalty is waived you do still have to have your accounts audited – so it will still cost you. There is a long list of criteria which the CRO will NOT allow as acceptable reasons for late filing http://www.cro.ie/ena/annual-return-penalty-waiver.aspx
So it’s all heavy stuff if you are late to file. It need not be scary, just speak to your accountant and don’t stick your head in the sand thinking it will all go away as it won’t.
I’d like to thank Tom Holmes of www.nard.ie for his help with this post and making sure I get the facts right.
So are you ready for your Next Annual Return Date?