Ltd co bankruptcy can't afford to file accounts is criminal offence!!!!

toffeepop

O.k so it looks likely myself & husband will go personally bankrupt and our business will cease trading. Our accountant will (understandably) not produce our end of year accounts as we cannot pay him for an old debt and have made him aware of the likelihood that we will not be able to pay him for any new debt. As it is a Limited Co you are required to use an accountant. Our accounts are now late. I understood that there are late filing fees but have just read this from Companies House:
"3. Are late filing penalties the same as fines imposed on company directors for non-filing of annual returns and accounts?
No. Failure to file annual returns or accounts is a criminal offence which can result in directors being fined personally in the criminal courts. Any criminal proceedings taken as a result of non-filing of annual returns and accounts is separate from and in addition to any late filing penalty imposed against the company for filing accounts late. The registrar may also take steps to strike the company off the public record if these documents are delivered late. There is no late filing penalty imposed on annual returns that have been filed late. Failure to pay the late filing penalty can result in enforcement proceedings." and

"The registrar cannot consider an appeal in the following circumstances as they are outside his discretion:

• you cannot afford to pay
• you relied on your accountant
• your company or its directors have financial difficulties (including bankruptcy)"

Yikes!!!!! help - anyone out there been through this. It is quite possible that none of our creditors will force us into bankruptcy and we have been paying off debt including to the accountant for at least a year and not increasing it. But we can't pay all that we owe to the accountant (it would take years) and going to a new one would presumably be trading insolvent and certainly would be imoral. We have only ever wanted to do the right thing.

I just don't understand how it can be a criminal offence to not be able to afford to pay for an accountant. Maybe I should have figured this out sooner but I have been working all hours doing everything as I imagine most people are by this point.

arcon5

Don't panic - highly unlikely any criminal charges will be brought - assuming you don't have a long history of it.

Firstly, having an accountant is NOT mandatory for a Ltd company. At least for those exempt for an audit - which is majority of companies out there.

Secondly, so long as you have acted in the best interest of the company, have not taken illegal dividends or breached your duties as a director then it's exceptionally highly unlikely this will happen (although most of this would only be discovered if a liquidators or insolvency practitioner was appointed).
What is likely to happen... the company will eventually be struck off for not filing accounts.

Although if the company in insolvent, might be worth inviting creditors to have you wound up - otherwise apply to be struck off through CH after 3 months have lapsed since you last traded.

When you say one of your creditors

---

you mean you personal creditors right? Not companies creditors? As you need to be clear of the distinction between the companies debts (which you personally are not liable for unless you signed a personal guarantee) and your personal debts.

Annisele

toffeepop wrote: »

I just don't understand how it can be a criminal offence to not be able to afford to pay for an accountant.

Don't worry, it's not. Unless your business is pretty big, you don't need an accountant. ("Pretty big" in this context means annual turnover above about £6.5million, assets above about £3.2million, and more than 50 or so employees - if only one of those applies to you you're still OK).

If you haven't already, you might find it helpful to speak to somebody like Business Debtline. If you're personally bankrupt anyway, and if the company isn't trading, then you might be better off just waiting for it to be struck off. But I stress I'm not giving advice there; I don't know anywhere near enough about your circumstances to do that.

toffeepop

Thank you once again - this forum is brilliant - what did people do before the internet? Seems unlikely then that hubby will go to prison! In all these years advice from 5 different bookkeepers and one accountant was wrong about needing an accountant as a legal requirement! Though someone would presumably have had to translate the spreadsheet into the format that is sent to Companies House, I may have pushed myself to learn many skills as a result of husbands' company but this is may be beyond me. Most likely outcome then would be personal BR (for personal debts) and company struck off. Will get accounts info in order and sell off what little we have left and invite creditors to wind us up. Whether we can avoid personal BR depends on working out our personal financial possition based on whether husband has got that new job or not and how much he is going to be paid and then seeing if we have anything left for our own creditors. You probably don't want to know that, but I think it helps to unjumble my thoughts by typing them out! No we haven't ever taken any dividends and haven't paid ourselves for many months though have taken out very small director loan repayments very rarely - still feel a bit nervous though and wouldn't want to take any more. Small business = jack of all trades and master of none!

Thrugelmir

Is the Company solvent and trading profitably ?

toffeepop

Not enough stock to cover its debts - had been trading for some time largely using main creditor, costs reduced to absolute minimum, reducing debt as we went by agreement with them and not using new credit from any supplier. Main reason for struggling to continue - bank. But now selling property which should largley get bank off our backs. If we go bankrupt personally, we can't be directors anyway and our personal finances have been screwed by having to not take a wage and only finding min wage, zero hour type work.

magpiecottage

Actually, if you do your own tax return for the business online you can opt for the relevant information to be submitted to Companies House at the same time. It is free.

You still have to submit the annual return (details of ownership of the business etc.but this can also be done on line. There is a fee but it is only £14, if I remember correctly.

tigerfeet2006

Please phone Business Debtline that some one linked to earlier. They will help unjumble your thoughts.

arcon5

toffeepop wrote: »

In all these years advice from 5 different bookkeepers and one accountant was wrong about needing an accountant as a legal requirement! Though someone would presumably have had to translate the spreadsheet into the format that is sent to Companies House, I may have pushed myself to learn many skills as a result of husbands' company but this is may be beyond me.

To clarify, it'#s not a legal requirement to have an accountant - but you cannot simply send your financial information to CH in a spreadsheet. Ltd company accounts usually follow a set format and must truly represent the position of the company for the year the accounts represent - which involves year end adjustments for things like accruals, pre-payments, doubtful debts and much more. So although not a requirement, is strongly recommended.

arcon5

toffeepop wrote: »

Not enough stock to cover its debts - had been trading for some time largely using main creditor, costs reduced to absolute minimum, reducing debt as we went by agreement with them and not using new credit from any supplier. Main reason for struggling to continue - bank. But now selling property which should largley get bank off our backs. If we go bankrupt personally, we can't be directors anyway and our personal finances have been screwed by having to not take a wage and only finding min wage, zero hour type work.

Is the property owned by you individually or the company?
Have you offered the bank a personal guarantee?

toffeepop

Ah well the property was owned by us but bank - HSBC forced us into securing the debt against it and giving a personal guarantee and then they forced us into turning the overdraft into a loan - doubled the repayments and added a £100 per month fee for being risky. In exchange we received a succession of hard to contact bank managers based all around the country, extra fees for the unavoidable bounced payments, interest on the unauthorised overdarfts caused when HSBC took their fees and repayments when there wasn't enough money to cover them. We continued to request the unfair £100 per month charge was removed to no avail and continued to request repayments at the amount we said from the start that we could afford. Now if they hadn't done any of that we would still be in business though economies would have needed to be made all the same.
I did look into submitting the year end accounts myself but came to the same conclusion as you arcon5 though I was still concidering finding a cheaper accountant when.....We have just received a striking off letter from Companies house not instigated by ourselves. Need to look into what next now. Thanks folks