Late filing of crucial financial documents with the Companies Registration Office (CRO) is a symptom of Covid-19 that Ireland’s business community is struggling to shake off. Anecdotally at least, Cantillon has seen a rise in the number of companies filing annual returns and accounts that are at least one but sometimes two years out of date. One accountant said this week the phenomenon is widespread and is a consequence of a malaise that crept in during the pandemic when the rules were effectively suspended to assist businesses.
It may seem trivial given the litany of challenges businesses are able to reel off at the moment. But one side effect of late filing is it prevents members of the public – be they creditors to whom the company owes money, customers or even investors – from obtaining accurate, reasonably up to date financial information about the business.
The good news for those who care about such things – but bad news for businesses with overdue filings – is that the CRO reinstated its pre-Covid enforcement regime last October. That means they can be involuntarily struck off the register. In practice, however, the CRO has had to temporarily suspended this process after 1,500 companies were incorrectly struck off earlier this year. It also means companies have the statutory 56 days after their annual return date to file the documents, after which they are fined €100 for the first day and €3 a pop each day after that up to a maximum fine of €1,200.
Crucially, companies will also lose their audit exemption for a period of two years for late filing, meaning they will have to get a qualified auditor to pore over their books. It means a process that would have cost a small company around €1,000 can now cost up to €2,000 or even €3,000.
According to corporate insolvency experts, the CRO is taking a gradual approach with enforcement. If a company has, for example, three years of filings outstanding, it will look for the latest documents first, giving the company some breathing room to get the two later years’ filings in order, rather than looking for them all in one go. That’s why some companies are only getting around to filing their 2021 accounts now.
The CRO received €7.9 million in late filing fees in 2022, according to its most recent annual report, an increase of more than 50 per cent from 2020. You can expect those numbers to surge in its next few annual reports as more companies fall foul of the reimplemented rules.
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