Companies House has published guidance on its approach to how and when it will use its enforcement powers to issue financial penalties under the Economic Crime and Corporate Transparency Act 2023 (Financial Penalty) Regulations 2024 (the “Regulations”).

As the guidance explains, the Regulations empower the registrar of Companies to impose a financial penalty on a person if it is satisfied beyond a reasonable doubt that a person has engaged in conduct amounting to a relevant offence under section 1132A of the Companies Act 2006. Penalties can either be a fixed penalty based on factors such as the offence and previous behaviour, or a daily rate penalty for each day the offence continues (or a combination of the two).

The guidance sets out that if the registrar suspects that a person has engaged in conduct amounting to a relevant offence, a warning notice may be issued which must set out: (a) the grounds for suspecting an offence has been committed; (b) a period within which representations can be made to the registrar; (c) how to deliver a representation; and (d) a warning that at the end of the given period, the registrar may impose financial penalties.

If a person takes the required action to which a warning notice relates (for example filing a confirmation statement that is late) within 28 days of the date of the warning notice, no financial penalty will be imposed. Equally, if a representation has been made within 28 days of the date of the warning notice, no decision will be taken by the registrar about the offence and penalty until all the information has been considered.

If, after this period, the registrar is satisfied beyond a reasonable doubt that a person has engaged in conduct amounting to a relevant offence, a penalty notice may be issued. The guidance sets out the information that a penalty notice must contain, including: the grounds for issuing the penalty; the type of penalty; the amount of the penalty and how it was calculated; how to pay the penalty; the rights of appeal; and the consequences of not paying.

Penalties are calculated based on the seriousness of the offence and whether the person is a repeat offender. They range from £250 for a minor first offence to £2,000 for a very serious offence committed by someone for whom it is their fourth or more offence. Failure to pay the penalty could lead to further penalties and, in the most serious cases of repeat offending, prosecution.

Finally, the guidance sets out the appeals process, explaining that a person may – with the permission of the court – appeal to the County Court (or Sheriff Court in Scotland). Appeals must be made within 28 days of the penalty notice, served on the registrar within 7 days of the date on which permission was granted, and can only be on the basis that the decision to issue the penalty was (a) unlawful, irrational/unreasonable, (b) made on the basis of a procedural impropriety or (c) otherwise contravenes the rules of natural justice.

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