The body content of your post goes here. To edit this text, click on it and delete this default text and start typing your own or paste your own from a different source.
New ParagraphWe are now seeing large fines being issued by Companies House to companies based outside the UK with land within UK (overseas entities) being fined for failing to register with Companies House by 31 January 2023. The fines are typically ranging from £10000 to £60000 but could be higher.
The Economic Crime and Corporate Transparency Act 2022 required overseas entitles to register themselves and their beneficial owners by 31 January 2023. Under paragraph 5, schedule 3 of the Act it is a criminal offence to fail to comply with the registration requirements. Companies House has power under the Register of Overseas Entities (Penalties and Northern Ireland Disposals) Regulations 2023 to take a number of enforcement measures against companies which failed to register as an overseas entity by the deadline including levying a fine. Under the Regulations the fine can be one of the following:
a) a fixed amount (“a fixed penalty”);
(b) an amount calculated by reference to a daily rate (“a daily rate penalty”); or
(c) a combination of a fixed penalty and a daily rate penalty.
There is an interesting provision in Regulation 7 (2) that
The registrar may not impose a daily rate penalty unless the person’s conduct constitutes an offence in respect of which a daily default fine may be imposed in the jurisdiction in which the offence was committed.
If therefore a daily fine was imposed it is only lawful if the overseas entity’s jurisdiction could have imposed the same level of fine in criminal proceedings. Further, if you have received a ‘daily’ fine note that the fine comes to an end as soon as you comply with the legislation by filing your application to be registered as an overseas entity.
Regard must also be had to guidance issued by Companies House as to how it will exercise its enforcement powers titled ‘Overseas Entities- A Guide to Enforcement’ which explains the factors Companies House takes into account in deciding whether and if so at what level to impose a fine. There is a 28 day right of appeal to the High Court on the basis that the decision was:
(a) unlawful
b. irrational or unreasonable
c. made on the basis of a procedural impropriety or otherwise contravenes the rules of natural justice
These are well established grounds for judicial review of decisions of any public body. As well as appealing (within the time limit) it should be noted that Companies House has specific power under Regulation 6 to vary or revoke a penalty if it considers it appropriate to do so. As such it is advisable to make representations direct to Companies House to vary or revoke the penalty as well as appealing within the time limit. Any representations will need to engage with the statutory guidance and legal principles which would be advanced in any appeal.
If you require advice or assistance please call us today to discuss your requirements in confidence on 0208858 5996 or 07894219314 or email winston.brown@brownandcosolicitors.co.uk