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Court summons for Director

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A client opened a dormant company two years ago, for some reason they didn’t file a confirmation statement which was due nine months ago. They decided they didn’t want the company but also didn’t correctly deal with closing the company so just forgot about the company.

in the meantime he has received a summons to court and on the assumption he has very little defence here I assume he will be fined and given a criminal record.

although I fully understand a directors responsibility this seems very harsh for a dormant company which he decided he didn’t even want.

 

has anyone else also experienced this? 

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23rd May 2019 09:09

Tell him to get legal advice from a solicitor.
David

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23rd May 2019 09:31

Wow! I have never seen anything like that before! Wonder if this is a sign of things to come and CH getting their [***] in gear?

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23rd May 2019 16:04

Yes; I too am very surprised by this. In fact, it's the 1st time I've heard of such action being taken for such CA 2006 non-compliance. See section 5 here:

https://www.gov.uk/government/publications/late-filing-penalties/late-fi...

http://www.legislation.gov.uk/ukpga/2006/46/section/451

Surely the limited resources of the state can be devoted to more pressing illegalities?

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23rd May 2019 09:50

I'm not a lawyer, but I don't think the matter described is criminal.

What's the summons for? Is it for non-filing? Or is it merely a claim for unpaid fees, which would result in a CCJ if not settled?

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23rd May 2019 10:04

This appears to cover it.
The nastier problem is in para 2 about disqualification
Get the client to a solicitor fast

The majority of offences apply to the company and every officer ‘in default’. According to section 1121(3) of the Companies Act, a director or officer is in default if he or she “authorises or permits, participates in, or fails to take all reasonable steps to prevent” the offence being committed. This is clearly a low threshold; it does not require the director or officer knowingly or intentionally to commit the offence. The reality is that directors and officers could be committing offences on a daily basis, blissfully unaware of the fact.

A conviction for any offence under the Act is also likely to lead to disqualification proceedings, as the director will be deemed to be ‘unfit’ to act as a company director. Therefore directors who are convicted of even minor offences risk, in addition to any fines imposed, a secondary but potentially more damaging sanction of being unable to continue as a director of any company.

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23rd May 2019 10:21

Never seen this before (thank goodness!), CHse normally just strike off such companies.

Interesting to see the exact nature of the offence as shown on the summons to ensure that there is not more to it than meets the eye.

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23rd May 2019 10:51

You don't say if they filed dormant accounts.
Normally, in the (long) absence of a CS, CH would commence a strike off - I'm guessing around the overdue CS @ 6 months overdue?
In any case, CH has always been clear that it is a criminal offence not to file.
What about the other stuff like a late notice of a change in directors?

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By SA2016
23rd May 2019 11:20

Thank you all.

There is nothing else to it which is why I am very shocked. I saw this on another client (who pleaded guilty in court) and now has a criminal record, however in that instance the company was very late with filing accounts.

The dormant company case seems very harsh and something for us all to consider with our non-compliant clients going forward. this may involve amending letters to client sending out accounts/co statements.

Apparently Co House are doing this a lot more often now according to a solicitor I have just discussed this with.

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to SA2016
23rd May 2019 11:39

Heck, thank you for taking the time to inform us.

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By sash100
23rd May 2019 12:49

This is shocking and will have repercussions. I know the government is putting more pressure on companies house

https://www.ft.com/content/f4ade274-6dc6-11e9-a9a5-351eeaef6d84

Perhaps also included in more stringent measures are those non business people that pay a measly £13 to set up companies on the whim. It must cost companies house more than £13 per company when a company is setup and closed. Problem is there are too many companies that are setup and have no intention of trading.

It will act as a deterrent though for those thinking about setting up a company and not taking their responsibilities seriously as a director. I agree that companies should be closed down properly rather than being struck off as there could be illicit reasons why directors prefer a company to be struck off.

I wish there was a consultation with Accountants how to improve companies house as they are just too inefficient.

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By AccSec
to sash100
23rd May 2019 16:01

i would be most grateful to see what the ft article above states in relation to what you have noted. We do not subscribe to ft unfortunately :( so I can view the article in question.

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By sash100
to AccSec
23rd May 2019 16:41

Trying googling "Companies House faces biggest overhaul in 170 years"

FT are strict in copying and pasting content

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By sash100
to sash100
23rd May 2019 16:48

There was another article I came across this month as part of the changes at companies house they were also going to get rid of one of accountants tricks of the trade i.e changing the accounting period by one day to extend the accounting period for three months to avoid penalties. Spoil sports.

If I find it will send the link

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By sparish
to sash100
24th May 2019 11:34
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By AccSec
23rd May 2019 13:03

This is shocking and the summons is not commensurate to the gravity of the "crime" committed.
We have had instances in the past where clients have let a Company go (against our advise) even though they have earned monies on which CT is due. Perhaps the tax office are passing on this information to Co house where applicable and pressing their agenda that way?
It will be interesting to see how this pans out in practice going forward and importantly if it is sustained by Co House with little info to go on.
Shocking but also sensible that maybe at last some of the serious defaulters cannot get away with it.

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23rd May 2019 15:09

Were you still able to deliver dormant accounts and CS to Companies House?

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23rd May 2019 15:38

I posted about this sort of thing in 2015 see below.

https://www.accountingweb.co.uk/any-answers/co-house-taking-client-to-court

They are targeted with prosecuting 400 offenders per month.

This was actually best ever post as I have 3 directors contact me about it since who became clients after I sorted this for them.

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24th May 2019 12:40

I'm obviously not a solicitor but wouldn't he have some sort of defence in the selective prosecution here? Companies House clearly don't take this action often so what is it about this case?

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