The ECCTA significantly expands the powers of Companies House and introduces a more robust enforcement framework to improve corporate transparency and tackle economic crime. The penalties for non-compliance are now more varied and severe, ranging from financial penalties to criminal prosecution.
Types of Penalties for Non-Compliance
Financial Penalties
Under the Financial Penalty Regulations 2024, Companies House can impose:
- Fixed penalties: Based on the severity of the offence and compliance history.
- Daily-rate penalties: Applied for each day the offence continues.
- Combined penalties: Both fixed and daily-rate penalties may be applied.
Financial penalty amounts
| First offence | Second offence | Third offence | Fourth or more offence | |
| Minor offence | £250 | £500 | £750 | £1,000 |
| Serious offence | £500 | £750 | £1,000 | £1,500 |
| Very serious offence | £750 | £1,000 | £1,500 | £2,000 |
Civil Action
Companies House may initiate civil proceedings for persistent or serious breaches, especially where financial penalties are ignored or compliance is repeatedly neglected.
Director Disqualification
Directors who fail to ensure compliance may face disqualification under the Company Directors Disqualification Act 1986.
Criminal Prosecution
For more serious offences, including:
- Providing false or misleading information: Now includes offences committed without reasonable excuse.
- Aggravated offences: Knowingly submitting deceptive information can lead to fines or imprisonment (up to 2 years).
- Failure to prevent fraud: Applies to large organisations (meeting two of the following: 250+ employees, £36M turnover, £18M assets). Penalties include unlimited fines if an associate commits fraud for the organisation’s benefit.
Enforcement Process
Warning Notice: Issued when a breach is suspected. The recipient has 28 days to correct the issue or provide a valid explanation.
Penalty Notice: If the warning is ignored, a formal penalty notice is issued detailing:
- Grounds for the penalty
- Type and amount
- Payment instructions
- Appeal process
Appeals and Legal Recourse
Penalty notices can be appealed through the County Court in England. The appeal must be based on procedural errors, disproportionality, or factual inaccuracies.
Next steps
PEM are an ACSP, we can provide this service for existing clients. Please get in touch with your regular PEM contact, who will be able to assist you with this.
Please note that this content is not intended to give specific technical advice. It is designed to highlight some of the key issues rather than provide an exhaustive explanation of the topics. Professional advice should always be sought before action is either taken or refrained from as a result of information contained herein.
