Corporate report

Annual report by the Independent Adjudicators to Companies House, 2021 to 2022

Published 8 September 2022

Introduction

Companies House currently has two Independent Adjudicators: Dame Elizabeth Neville and Mrs Jessica Pacey. The third Adjudicator, Mr Leslie Cuthbert, left half-way through the year, on 6 October 2021. Two new adjudicators were appointed in June 2022. Our principal role is to deal with third stage appeals against late filing penalties imposed on companies and limited liability partnerships, which have filed their accounts after the filing deadline. If an appellant wishes to pursue an appeal, which has passed through the two internal stages of the appeals process, it is passed to one of us. If an appeal is rejected by an Independent Adjudicator, the appellant may appeal to the Registrar who is the final arbiter in the appeals process.

The Independent Adjudicators also consider complaints made against Companies House. If the complainant is dissatisfied with the outcome of the three internal stages for consideration of a complaint, they may ask for the matter to be referred to an Independent Adjudicator. We also deal with complaints, which are closely related to appeals that have been referred directly to us without passing through the complaints process. A complainant who remains dissatisfied with the findings of the Independent Adjudicator may approach a Member of Parliament and ask for the matter to be referred to the Parliamentary and Health Service Ombudsman. It has transpired that complaints referred to us are not captured by the Companies House complaints system, even though our recommendations are acted upon. This is now being addressed.

As well as adjudicating on cases referred to us, we make recommendations and suggestions on service and process issues with a view to improving organisational efficiency and fair treatment of customers. This year, we have made ten recommendations, which are set out in Appendix A. One recommendation is outstanding. One recommendation from 2019 to 2020 (Appendix B) is still outstanding and relates to a current programme of work.

We are not part of Companies House and are completely impartial. A brief outline of our professional profiles may be found on GOV.UK. Our cases, whether appeals against late filing penalties or complaints, are allocated by rotation to ensure a lack of partiality. We do not give out our personal postal or email addresses to protect our privacy and security. We use the Companies House address for postal communications and we each have a Companies House email address.

Companies House has developed an online appeals service, which has been in place since 6 September 2020. It is designed to speed up logging and response times and make the process simpler. The appellant is advised what types of appeal are unlikely to be successful and invited to set down precisely the grounds for appeal, whereas previously appeals were made in free text. By March 2022, about a third of appeals were made electronically.

Backlog of appeals

The impact of the coronavirus (COVID-19) pandemic has continued to be felt at Companies House. In spite of the easements and extensions, late filings went up dramatically (nearly 380,000 in 2021/2022 compared with 178,000 in 2020/2021), as did the number of appeals against late filing penalties (over 83,000 compared with 47,000). A large backlog has been built up of appeals that need to be logged on the system.

Late filing penalty appeals are received either by email to the Companies House address or, increasingly, by using a dedicated online appeals service. An automated reply is sent in both cases and the appeal is transferred to the Late Filing Penalties team (LFP) for logging and then to be dealt with. The automated replies to messages sent to both the generic email address and to appeals by way of the dedicated online service did not convey that there would be a long delay. This has been changed and will be reviewed again to provide more clarity. The overall effect on appellants was a view that Companies House was difficult to contact and not responsive. Many replies to first appeals apologised for and explained the delay, but others were silent on this, leading appellants to express a negative view of the process. We made a recommendation, which has been actioned.

Companies House put in resource-intensive mechanisms to ensure that further penalty invoices were not sent and collection action was not initiated for companies that were in the queue awaiting a response. However, this could not be done until an appeal was logged so payment was chased for many companies, which caused appellants, understandably, to be aggrieved. At the worst point on 19 October 2021, there were 19,275 appeals waiting to be logged, dating back to 1 July 2021.

Commonly, an appellant would not receive a response to a first appeal for six months or more. Subsequent responses were also delayed. Huge efforts were made to deal with the backlog against the backdrop of increasing numbers of appeals. Changes were introduced to speed up the process. Emails were filtered to identify vulnerable appellants and coronavirus-related cases so responses could be expedited for those cases. If there was a query, team members telephoned appellants, instead of sending an email. A call-back process was introduced, which enabled staff to prepare for phone calls, reducing call length and the need for further contact. Staff worked overtime, additional staff were brought in from other areas and temporary agency staff were employed until 31 March 2022. The budget was increased to support the recruitment of approximately 26 additional staff to take over from the agency staff on temporary contracts for up to two years. This recruitment uplift and associated training programme has commenced and is projected to be completed by the end of July 2022.

One of the primary aims was to reduce the delay in logging appeals. By 31 March 2022, appeals were being logged as they were received, and this continues to be the case. However, because the number of appeals received was continuing to rise, in spite of the additional resource, it has not been possible to reduce the number of appeals waiting to be dealt with. Although by February 2022 more appeals were being cleared than received, on 31 March 2022 there were 38,507 appeals in the queue. Appeals from 27 July 2021 were being dealt with 8 months after they were received.

The situation worsened when the agency staff left at the end of March 2022 before the new staff had come on stream. By 1 June 2022, 44,665 appeals were waiting to be dealt with and cases received on 18 August 2021 were being dealt with. Further improvements to the system are being made including the trial of artificial intelligence to make a first sift. It is expected that the numbers will start to fall by September 2022, but this is contingent on whether the number of appeals received stabilised. The intention is that the backlog will have disappeared by the time the additional funding for 26 staff has come to an end and this is being carefully monitored.

Appeals

Numbers of cases and types of company

One of the consequences of the backlog is that the adjudicators have been dealing with appeals made much longer ago than in previous years. Most of our cases relate to the late filing of 2019 and 2020 accounts.

83,394 appeals were received against 379,493 penalties imposed in 2021/22 (appeal rated 22%). This was a dramatic increase on the previous year (2020/21) when 47,166 appeals were received against the 177,865 penalties imposed (an appeal rate of 26.5%). 11,218 (13%) appeals were allowed. There was a very large increase in rate of appeals made in the last five months of the year (48,628) compared with the first seven months, more than the total appeals for 2020/21, requiring herculean efforts to process.

The Independent Adjudicators considered 87 appeals in the period 1 April 2021 to 31 March 2022, a reduction of 28 on the previous year, which was already heavily reduced when compared with the usual number of referrals of around 320. We surmise that this was because of the considerable slowing of the appeals process.

Table 1: Number of appeals considered by Independent Adjudicators

	2011-12	2012-13	2013-14	2014-15	2015-16	2016-17	2017-18	2018-19	2019-20	2020-21	2021-21
Total	583	466	391	305	306	329	267	337	329	115	87

We upheld 6 of the 87 (just under 7%) appeals referred to us.

Types of companies

The nature of the companies appealing against penalties imposed because their accounts had been filed late was broadly in line with the distribution of previous years. The types of company, which made up more than 10% of our appeals, are:

• dormant/not trading: 26 (30%)
• double penalty imposed: 20 (23%)
• first accounts: 13 (15%) (some were also dormant/not trading)

First accounts and dormant companies

Impact of ceasing to send reminders to file accounts by post

35,756 appeals (43% of all appeals) were received from companies registered as dormant in 2021/22. This is an extraordinarily high figure, thought to be because of large numbers of dormant companies being incorporated during the coronavirus (COVID-19) pandemic. Dormant companies are always disproportionately represented in the cases referred to us with very high figures for non-compliance year on year. It is common for new companies to file dormant accounts in their first year, so there is an overlap between the two categories. We have been consistently drawing this to the attention of Companies House for many years.

7,996 of the companies, which were due to file their first set of accounts between 1 April 2021 and 31 March 2022, filed late and then appealed to Companies House.

In 2019/20, we recommended that Companies House consider how compliance might be improved, in light of the withdrawal of the paper reminder to file accounts on 2 November 2020, which we were concerned could cause the situation to worsen. The impact would begin to be seen from the start of August 2021. Given the time taken for an appeal to reach us, and the additional delays caused by the backlog, it was not until March 2022 that we started to see appeals based on not having received a reminder letter and not having received the advisory letter, which was sent to all companies receiving paper reminders on 9 November 2020. We expect to see many more in the current year.

Last year we were told that the Companies House communications team was carrying out analysis to identify what might be done to improve compliance by these companies. A ‘directors’ responsibilities’ campaign ran between January and March 2021 and improvements were made to the ‘being a company director’ guidance page on the Companies House website, but these do not seem to have reached the people who most needed to receive the information.

Ideas advanced by us were that the new directors’ letter could present the requirement for all companies, including those not trading, to file accounts in in a more impactive way. Another suggestion was to place a red warning flag on email reminders to companies filing their first accounts or who had filed dormant accounts in the previous year. Neither suggestion was taken up.

The new directors’ letter still does not specify that companies must file accounts even if not trading. Companies House is again considering how compliance might be improved for newly incorporated companies. We recommend that Companies House consider whether the new directors’ letter should be amended to state explicitly that all companies must file accounts, whether trading or not, and to consider placing a red warning flag on email reminders to companies filing their first accounts or which filed dormant accounts in the previous year.

The objective of Companies House is to improve compliance. Given that appeals from dormant and newly incorporated companies make up over a third of the appeals to us, we again recommend that Companies House take dynamic action to improve compliance by dormant and newly incorporated companies.

Not for profit, charity and Community Interest Companies (CIC)

Previously, there was a particular problem with the filing of CIC accounts because they could not be filed electronically. Errors were made because of the additional requirements for CIC accounts. WebFiling was made available to CICs on 2 September 2019, which has eradicated these problems. We only received four appeals from CICs in the last year.

An appeal to the Adjudicators was received from a dissolved company. The Registrar was not seeking to recover the penalty as the company no longer existed. The Adjudicator agreed to consider the appeal because if the company were restored in future, it would become liable to pay the penalty.

Grounds for appeal

Appellants frequently have more than one grounds for appeal. Over the years, there has been little change in the most common grounds for appeals to the Independent Adjudicators. Reasons for late filing, which were given for over 10% of the cases referred to us, are listed below.

Coronavirus (COVID-19)

We received 24 (28%) appeals where the impact of COVID-19 was one of the grounds for appeal. Appeals where the late filing of the accounts was directly attributed to COVID-19 were generally allowed by Companies House at an early stage. The COVID-19 pandemic cases referred to us were not considered by Companies House to have caused the late filing. We did not uphold any of these appeals.

Financial hardship or penalty is unfair

A substantial number of appeals (37 or 42%) included as grounds for appeal that the company or appellant is experiencing financial hardship, often because of COVID-19, or that the amount of the penalty is excessive.

Ill health of director

In 18 (21%) of cases, the appeal was based on physical or mental illness of a director. Where an illness or injury is long standing or chronic, Companies House expects the director(s) to make arrangements to ensure the timely filing of the accounts. If a company has more than one director, as all directors are responsible for ensuring the accounts are filed on time, it is expected that the other director(s) will step in.

Exceptional circumstances

11 (13%) of appeals were on the grounds of exceptional circumstances other than a director’s ill health, for example, the death of a director, bereavement, computer failure or other circumstance affecting the company or a sole director. An appeal will be allowed if it occurred sufficiently close to the filing deadline to make it impracticable to make alternative arrangements or apply for an extension to the filing deadline.

Electronic filing of accounts

In 12 (14%) of cases, the user had a problem with WebFiling. Numbers of accounts filed using WebFiling have gone up progressively and 89.4% of companies now file their accounts electronically. As the Companies House systems have improved, users have become more familiar with the process and generally more used to using electronic systems, the numbers experiencing problems has fallen.

Problem with accountant or other third party

Directors’ reliance on accountants or bookkeepers can lead to accounts being filed late. 20 (23%) appeals were because of a problem with accountants or similar. Because the legal responsibility for filing accounts rests with the director(s) of a company and not any third party, such appeals are usually rejected, and we did not uphold any of these appeals.

Non-receipt of a reminder to file the accounts

In 13 cases (11%), non-receipt of a reminder to file accounts was a ground for appeal. Until 9 November 2020, Companies House posted a reminder letter to a company’s registered address about a month before the filing deadline if it had not registered to receive reminders by email or had not already filed its accounts. This explained that the company must file accounts even if it was dormant or had not traded. The same message is conveyed in email reminders. On 9 November 2020, a letter was sent to all companies not registered for email reminders to inform them that they would no longer receive paper reminders and advising them to sign up to the email reminder service. Once a year has elapsed since the cessation of paper reminders, this problem should resolve itself.

73% of companies are registered to receive reminders by email and some appeals are because the email was not received. Sometimes the registered email address has ceased to be effective, often because it is an accountant’s email address, and the company has changed accountant. This problem is easily solved by registering more than one email address.

Confusion or mistake by the person filing the accounts

Examples of the kind of thing that can go wrong are the director(s) not knowing that accounts have to be filed, believing that the obligation to file accounts at Companies House is discharged by filing them with HMRC (Her Majesty’s Revenue and Customs), or assuming that because they are not required to file accounts at HMRC, they are not required to file them at Companies House either. 10 (11%) of cases fell into this category.

Appeals to the registrar

The fourth and final stage of the appeals process is an appeal to the Registrar. Thirty-two of the appeals rejected by the Independent Adjudicators were the subject of a further appeal to the Registrar (see Table 2 below). The Registrar did not uphold any appeals. In most cases, appeals to the Registrar do not contain any new information and the Registrar only occasionally reaches a different conclusion from the Independent Adjudicator.

Table 2: Referrals to the registrar

	Number of cases escalated to registrar	% of total cases dealt with by Adjudicators
2007-08	22	37
2008-09	27	23
2009-10	68	20
2010-11	109	22
2011-12	120	21
2012-13	112	24
2013-14	85	21
2014-15	68	22
2015-16	62	20
2016-17	64	16
2017-18	86	32
2018-19	140	42
2019-20	110	33
2020-21	44	38
2021-22	32	37

Upheld appeals

We upheld or partially upheld five (6%) of the appeals referred to us.

Exceptional circumstances

Case 1

The directors of this company were faced with a dilemma. They could commit the offence of not filing the company’s accounts or could file accounts, which might be materially incorrect and potentially misleading because the company was potentially insolvent, depending on the outcome of the negotiations with HMRC (a more serious criminal offence). The directors were going through a process to negotiate a settlement on unpaid tax with HMRC and their accountants advised them not to file the accounts. The outstanding two sets of accounts were filed as soon as the settlement was reached, which took some time. The Adjudicator found that this was an exceptional situation, and the penalties should not be collected. Companies House contributed to the delay in filing the accounts.

Cases 2 and 3

If a company does not file its accounts by the filing deadline, Companies House sends it a notification by post, usually about a week after the deadline has passed. Companies House brought in a number of easements to support companies during the coronavirus pandemic. In two cases, the temporary changes unintentionally led to companies not being notified that their accounts were overdue in time for them to be filed within one month of the filing deadline and incur the lowest level of penalty (£150). In both these cases, the Adjudicator found that the accounts were filed late, but only the lowest level of penalty should be collected.

Companies House considered whether problems inadvertently caused by the easements were more widespread, but it appeared that these were isolated cases, so no action was necessary.

Case 4

Accounts for this company were received in paper form at Companies House by the filing deadline but were rejected because they did not contain a balance sheet. Paper accounts are scanned, and the scan is passed to the document examiner. Occasionally a page is missed. If there appears to be a missing page the usual practice is for the document examiner to ask for the original to be checked but this was not done. In this case, the scan of the accounts jumped from page 8 to page 10, so the balance sheet, page 9, may have been missed in the scanning process. The original accounts were posted back to the company’s registered office, which was its solicitors, where they were apparently not received, so it was not possible to check if the balance sheet was there or not and whether the accounts had been correctly rejected. The Adjudicator concluded that it was more likely than not that the balance sheet had been included in the accounts. It was recommended that the document examiner be advised of the need to check whether a page is missing because of not having been properly scanned.

The directors were unaware that the accounts had been rejected. They should have checked that the accounts had been accepted for filing but did not do so. Companies House sent two automatically generated overdue accounts notices but neither bore the post code of the registered address and the solicitors have no record of receiving them.

The Adjudicator recommended that the penalty should not be collected and that a date credit should be given for the date on which the accounts were first received at Companies House.

The company’s registered address was very long because two lines were duplicated. Companies House arranged for this to be amended. In the past, it was not uncommon for the postcode to be omitted from automatically generated communications from Companies House to companies with long addresses. A recommendation was made in the Independent Adjudicators’ Annual Report 2013/14 Appendix 2. The response said: ‘Companies House changed its automated system for addressing letters so that the postcode is automatically included, irrespective of the length of the address.’ No problems were identified thereafter until this case, and none have been found subsequently. The Adjudicator made the following recommendation: ‘It seems that it is possible for automatically generated notices to be sent out without postcodes. I recommend that the issue be looked into and remedied. Late filing penalty appeals staff should check that letters have been properly addressed to the company.’

Requirement for Companies House to act consistently.

Case 5

The appellant was the director of two dormant companies and the accounts of both were filed late. The director made a separate appeal for each company, both on the same grounds. His first appeal was allowed but his second was rejected. Irrespective of the rights and wrongs of the appeal, the Adjudicator determined for reasons of consistency that the outcome of the second appeal must be the same as for the first and upheld the appeal.

Other observations and recommendations

Quality of responses to appeals

We still identify poor quality responses by Companies House staff and recommend that feedback be given to the relevant member of staff. The overall quality of responses appears to have improved, but we still see long replies containing pasted elements, which do not relate to the appeal before they address the core issue, or sometimes do not address it at all. It is obvious to the appellants that they have received a standard response and sometimes they comment on it. We recommended last year that Companies House improves the quality of its responses to appeals. We will continue to monitor the situation.

Retrieval of telephone recordings

When an appeal refers to a telephone call made to Companies House, the person replying to the appeal will ask for the information needed to retrieve a recording of the call. Calls to the Contact Centre are retained for 12 months and calls to other numbers are retained for 18 months. From time to time, details will be requested when it is already too late to retrieve the recording. This is more likely to happen if the appeal relates to accounts filed a long time ago, or where it has taken a long time to reply to the appeal because of the backlog. The appellant then might try to find the details of the call and is disappointed or disbelieving when told that the recording is no longer available. We recommended that more care be taken and appellants are not asked for information about telephone calls when it is too late to retrieve a recording.

Electronic signatures

Companies House staff are not all familiar with the signatures policy, which was updated on 16 December 2019, allowing a wider range of signatures on documents submitted to Companies House. This has the potential to cause confusion and for wrong advice to be given. Furthermore, the Companies House guidance had not been updated. The Adjudicators recommended that the Companies House guidance on signatures be updated. This was done on 24 March 2021 and staff in the Contact Centre have been updated.

Complaints

Three complaints were referred to us at the third stage of the complaints process. Two elements of the third complaint were upheld but no action was required.

Complaint 1

The director of a company complained about the refusal of Companies House to remove information from the company’s public record. The Adjudicator found that Companies House acted correctly in placing the documents on the company’s record and was obliged by law to do so. The Registrar has no power to remove the documents from the company’s record and cannot remove them without a court order. The complaint was not upheld.

Complaint 2

The complaint was that Companies House should have done more to enable the complainant to obtain a copy of the members’ register of the company from its managing agents, which was not a matter directly for Companies House. Companies House had assisted the complainant within its power. The Adjudicator found that Companies House had acted correctly and that the complaint was unfounded.

Complaint 3

A director’s personal information was confused with that of another person with a similar name and the same month and year of birth. The director was correctly shown as director of two dissolved companies. He was also, because of the identity confusion, listed as an active director of five companies of which he had never been a director. Companies House had submitted the inaccurate information about him to a third party, which sold it for credit reports. He asked that Companies House immediately correct the data breach and notify the director of the other companies and the third parties to whom his personal information had been supplied. This was all done. There was no evidence that the complainant had suffered any quantifiable damage. The complaint was upheld to a limited extent.

Further complaints were that Companies House had not handled the matter well. A complaint that Companies House had disputed the inaccuracy of the register information for five months was not upheld. The complaint about information having been passed on by the third party was not upheld because it had been legitimately passed on and Companies House had no control over what was then done with the information. A complaint was made that the first response to the correspondence was not made within the five working day target. Companies House had apologised and there is little evidence that the register would have been rectified appreciably earlier if a response had been sent earlier. This element of the complaint was upheld.

Complaints made within appeals

We consider complaints made within appeals if they are closely related to the appeal, although not part of the grounds for appeal. Frequently, complaints are made about how an appeal has been handled. We clearly identify the complaints and findings within our reports. Any recommendations are logged and acted upon, but it was discovered during the year that the neither the complaints nor the findings are recorded in the Companies House complaints system. Action is being taken to remedy this.

10 complaints were made in 2020/21 in the course of an appeal against a late filing penalty. In most cases, multiple complaints were contained within one appeal. Nine cases included a complaint about the long delays before receiving a response. The tenth complaint was solely about the delays. These were all caused by the backlog which has been discussed. We report on the remaining nine complaints below. We upheld nine elements of the complaints and made five recommendations.

Complaint 1

The appellant had addressed his appeal to one of the Adjudicators and he complained that she had not dealt with it. This is because the allocation of appeals to the Adjudicators is dealt with by the Senior Case Unit and is by rotation. In this case, it was allocated to the other Adjudicator. This complaint was not upheld.

Complaint 2

Several complaints were made by the appellant. * The emails from Companies House appeared not to be addressed to him. This is because Companies House emails are sent from the creator to an internal Companies House email address from which they are forwarded to the addressee. The emails were correctly sent to the appellant and the complaint was not upheld. * The penalty was passed to a debt collection agency for collection. He had not received an email, which Companies House had sent, so he had not responded and debt collection was initiated. The complaint was not upheld. * An error was made by a member of Companies House staff in referring to an email from the appellant, which he had not sent. No detriment to the appellant was found and the complaint was upheld. The Adjudicator recommended that Companies House staff should check the accuracy of their emails. The individual concerned is on long term leave and this will be addressed through their refresher training on their return to work. * The appellant asked how he could pursue a formal complaint and was not provided with this information. The complaint was upheld. The Adjudicator recommended that Companies House ensures that all information requested is provided. The individual concerned is on long term leave and this will be addressed through their refresher training on their return to work.

Complaint 3

Two complaints were made by the appellant. • The failure to send a response, but Companies House had replied to the email address provided. The complaint was not upheld. • The difficulty in contacting Companies House by telephone. The Companies House Contact Centre was closed for a period (25 March 2020 to 24 July 2020). Callers were invited to send an email. After it reopened, the volume of calls increased, callers could not always get through and would be timed out after a while. However, there was always the option to send an email. There were delays in replying to appeals but not elsewhere in the organisation. The complaint was not upheld.

Complaint 4

Four complaints were made. * The appellant and his accountant have been called liars. The complaint was not upheld. * Companies House is ‘a bullying procedure led organisation’. The complaint was not upheld. * The Contact Centre at Companies House had not told him that there was a complaints process. The complaint was not upheld. * Companies House profits from the penalties imposed because of the poor functionality of its WebFiling system. The complaint was not upheld

Complaint 5

Two complaints were made. * The director had been wrongly told that a recording of her telephone call could be retrieved. The complaint was not upheld as the fault had already been recognised and an apology given. * It is unacceptable only to retain recordings of telephone conversations for a year. The complaint was not upheld as it is a reasonable policy.

Complaint 6

• The wrong year was shown for the date on which the accounts were filed in reply to first appeal. No confusion was caused and an apology was given. The complaint was upheld to a limited extent.
• Companies House gave conflicting deadlines for payment of the penalty. An error was made in reply to the second appeal, which allowed a shorter period than that allowed in the first appeal. A careless error was made with no negative impact. The complaint was upheld.
• Different reasons were given for copying an email to another Companies House member of staff. One reply was less informative and more general than the other. The complaint was not upheld.
• Details of the appeals procedure and guidance notes could not be found on the Companies House website. This is not correct. The complaint was not upheld.
• The appellant thought that many of the late filing penalties issued in the last eighteen months were unjustified. The complaint was not upheld.
• The director who was responsible for filing the accounts should be supported in accordance with the Companies House vulnerable customers pledge. Companies House was unaware of the director’s vulnerability. The complaint was not upheld.
• Companies House gave different descriptions of when an appeal may be allowed. Two examples were given. The complaint was not upheld.
• Companies House was unsympathetic, showing no interest in individual circumstances and simply referring the appeal to the Independent Adjudicators. The complaint was not upheld.

Two elements of this complaint were upheld but no action was recommended.

Complaint 7

• No reply was sent in response to the first letter of appeal, which was enclosed with the accounts and appears not to have been recognised as such. The complaint was upheld. The Adjudicators have twice previously made the following recommendation and make it again: appeals contained in covering letters enclosed with accounts are sometimes not recognised as such and it is again recommended that staff are appropriately advised to take more care. Feedback and management advice have been provided to the Document Management Service.
• Companies House is slow to reply. The responses were all sent in a timely way. The complaint was not upheld.
• Demands for payment of the penalty. This was caused by the failure to deal with the first letter of appeal. The complaint was upheld.

Two elements of the complaint were upheld.

Complaint 8

The appellant made a request for a call back from a member of Companies House within 24 hours, a facility offered by Companies House. This did not take place. The complaint was upheld. No action was recommended.

Complaint 9

The director had not been advised that there would be a delay in replying to his appeal. Companies House had not updated its automated responses to indicate that there could be an extended delay in responding to appeals. The complaint was upheld. It was recommended that Companies House takes steps to inform appellants of delays. It is also recommended that all responses to appeals should explain and apologise for any delay in responding. Companies House has amended its automated responses, which no longer provide a response time but give an assurance that the communication will be considered, that there is no need to make further contact and that recovery action will be placed on hold. The automated replies are likely to be further amended to make them more informative. Team members have been advised and this has been incorporated into training for new recruits.

The first response from Companies House did not explain options to appeal further. This is the usual practice. Although there is a link to how to appeal on the Late Filing Penalty invoice, In the interests of fairness and transparency, appellants should be made aware of what their options are to take their appeal further in the first reply to their appeal. The complaint was upheld. We recommend that steps be taken to ensure that the appeals process is explained in the first response to an appeal.

Conclusion

Companies House has been under severe pressure over the last year because of the coronavirus (COVID-19) pandemic and the consequent restrictions. Rapid action was taken to ensure continuity of service while making the transition for many staff to work from home. The staff in the Senior Casework Unit with whom we deal behaved with their usual professionalism, efficiency, patience and good nature, making what seemed to us to be a seamless transition to home working, although we imagine that they experienced difficulties and were subject to stresses, which were not visible to us.

There has been great improvement in the efficiency of the relationship and the quality of communication between the Independent Adjudicators and the Senior Appeals Manager. Companies House has been responsive to our recommendations all except one of which have already been actioned. We expect that the number of appeals reaching us will increase from this year’s low level, but we do not doubt that everything will continue at its present high standard.

Dame Elizabeth Neville DBE QPM DL

11 July 2022

Appendix A

Summary of recommendations 2021 to 2022

We recommend that Companies House considers whether the new directors’ letter should be amended to state explicitly that all companies must file accounts, whether trading or not. We also recommend that Companies House considers placing a red warning flag on email reminders to companies that are either filing their first accounts or have filed dormant accounts in the previous year.

The Adjudicators again recommend that Companies House take dynamic action to improve compliance by dormant and newly incorporated companies. Outstanding.

Appeals

The Adjudicator recommended that the document examiner be advised of the need to check whether a page is missing because of not having been properly scanned. This was done. Complete.

It seems that it is possible for automatically generated notices to be sent out without postcodes. It was recommended that the issue be remedied. If relevant to the case, late filing penalty appeals staff should check that letters have been properly addressed to the company. Initial investigations failed to discover why the postcode was missing. This appears to be an isolated case. Complete.

We recommended that more care is taken and appellants are not asked for information about telephone calls when it is too late to retrieve a recording. This has been addressed and a mechanism provided to the Late Filing Penalties team to ensure that such errors are not made. The customer is directed to reply to the ‘time critical’ email box is used if phone call details are required, so their response can be expedited. Complete.

The Adjudicators recommended that the Companies House guidance on signatures be updated. This was done on 24 March 2021. Complete.

Complaints

The Adjudicator recommended that Companies House staff check the accuracy of the contents of their emails. The individual concerned is on long-term leave and this will be addressed through their refresher training on their return to work. Complete.

We recommend that Companies House ensures that all information requested by correspondents is provided. The individual concerned is on long-term leave and this will be addressed through their refresher training on their return to work. Complete.

Appeals contained in covering letters enclosed with accounts are sometimes not recognised as such and it is again recommended that staff are appropriately advised to take more care. Feedback and management advice provided. Complete.

It was recommended that Companies House takes steps to inform appellants of delays. It is also recommended that all responses to appeals should explain and apologise for any delay in responding. Companies House has amended its automated responses, which no longer provide a response time but give an assurance that the communication will be considered, that there is no need to make further contact and that recovery action will be placed on hold. The automated replies are likely to be further amended to make them more informative. Team members have been advised and this has been incorporated into training for new recruits. Complete.

We recommend that steps be taken to ensure that the appeals process is explained in the first response to an appeal. Late filing penalties appeals staff to be briefed. Complete.

Appendix B

Summary of recommendations 2020 to 2021

None

2019 to 2020

We recommend that Companies House considers how compliance by dormant and newly incorporated companies might be improved, given their already disproportionate lack of compliance and in the light of future potential developments.

Recommendation discharged as it is the subject of a 2021/22 recommendation.

We urge Companies House to ensure that a hold is put on recovery proceedings while an appeal is in progress. Currently, Companies House places holds on collection manually. It is developing a process for an automatic hold to be placed by its finance system on action to collect the penalty when an appeal is made via the dedicated appeals portal. Work has not started and the project will be reviewed in August 2022. Two interim systems have been developed to make the manual process easier and quicker. One will be live in June 2022 and the other is undergoing testing.

A manual hold will still be placed for appeals that have been dealt with, where collection action has been initiated but a further appeal is then made.

During 2021/22 holds were not placed on collection action until appeals were logged and there were long delays. This resulted in action being taken to recover penalties when an appeal had been made but not yet logged. All appeals are now logged within two days of receipt so this will no longer arise.

We will monitor the situation during 2022 to 2023 and hope to see improvements, given the current initiatives. Complete.