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Companies House: How to fix submission mistakes

  1. iStock_zimmytws
    Francois Badenhorst

    Francois Badenhorst Deputy Editor Staff Member

    Posts: 91 Likes: 18
    1 |

    In this article originally featured on AccountingWEB, Jennifer Adams considers the legal position should mistakes be made in documents submitted to Companies House, and looks at how such mistakes may be rectified.

    Companies House is essentially a recording department and if mistakes are made on submission then their role is reactive rather than proactive. This means it cannot correct an error over the phone or amend without signed authority from either the person who originally submitted the incorrect material or the company itself. It has no legal authority to reject a properly delivered document.

    Of all government departments, Companies House is known to make few mistakes (although no statistics are given in their Annual Report), which is why the mistake that befell the company in Sebry v Companies House 2015 was thought to be unprecedented. 

    In brief, a High Court judge ruled that a spelling error caused the 124-year-old Welsh family business to fail after it was wrongly recorded by Companies House as being wound up in 2009 – for more details see 'Companies House blamed for collapse of firm'. One point to note from the article is AccountingWEB member Caber Feidh's interesting comment detailing the Companies House procedures which lead to the mistake.

    However the error was made, the case confirms that Companies House owes a common law duty of care to companies in respect of the information held on the Register. Following this case Companies House appears to be more vigilant, stepping up their rejection rate of submissions, (as detailed in this article, pointing out errors in submission and requesting amended documents.

    This is exactly the situation AccountingWEB member scracey found himself in with reference to an inconsistency in a client's accounts that had been picked up by Companies House (in this Any Answers post). Companies House had written pointing out an inconsistency with information already on record and was demanding an amendment. The responses of members listing their experiences of similar situations make for interesting reading.

    The process of amendment

    Companies Act 2006 permits amendment in certain circumstances, either by submission of the corrected material together with the submission of a specific numbered form or by Court order. The relevant sections are to be found in s1072 – s 1076 'Requirements for Proper Delivery' and s1093 – s1098 'Correction or Removal of Material on the Register'.

    The following is an overview of the more usual situations that members may meet:

    Unnecessary material s1074

    This section covers the situation where material has been filed which is either not required or not authorised to be so e.g. where a company or LLP submits tax computations with the annual accounts, such pages neither being required or authorised to be delivered under any Act or Regulations.

    If the material has been submitted on paper, then the unnecessary pages can easily be separated from the rest of the document. However, as most submissions are now online this is no longer so straightforward. Hence the submission is usually rejected with an amended version being requested using the s1076 'Replacement of document' route.

    • 'Replacement of document' s 1076

    This section applies if the original document does not meet with filing requirements (e.g. it was not signed if paper, or does not include the company or LLP name and number where required), or contains unnecessary material. The replacement document must be filed on paper with form RP01/LLPRP01 by the person who delivered the original or by the company to which it relates. It is then up to the Registrar to decide whether to remove the original document from the records - but they are under no legal obligation to do so. If not then both documents will remain on the register. Documents having legal consequences (e.g. change of name) cannot be removed.

    • Inconsistencies s1093

    Companies House cannot reject a form or submission just because the information appears to contradict material that has already been submitted; they must accept whatever is sent and load the material onto the Register. However, if their computer flags up inconsistencies with other previously submitted documents they can write to the company/LLP and request resubmission to correct. Should no response be forthcoming then they will issue a formal notice requiring delivery and it is an offence not to comply. On conviction, the penalty is £5,000.

    Until the matter is resolved the Register will be annotated to show that there is an inconsistency.

    Examples of the type of inconsistencies and the procedure for dealing with them can be found at this link.

    Depending upon the error there are different forms that are required to be submitted (e.g. RP02b/LLRP02b for a change in registered office address.

    • Informal correction s 1075

    This section refers to charges and mortgages only. This is because there are legal time constraints on the delivery of such documents (21 days, beginning with the day after the day the charge was created.) If an error is found on the document submitted, then without this section the charge may miss the deadline date, rendering the charge invalid. Under the section Companies House will informally correct a document. However, they still require formal instructions from the person who authenticated the document (or the person who submitted it). For more details see this link.

    • Second Filing

    The filing of a second form (RP04 'Second filing of a document previously delivered') will correct a previously submitted incorrect one. The disadvantage of this route of rectification is that the original remains onsite although the newly corrected information will be headed 'Second Filing' so searchers can see what is correct.

    Errors on only certain forms can be corrected, details of which can be found here.

    Note: Correction of a confirmation statement

    If a confirmation statement has been filed which is then subsequently found to be wrong then a form RP04 under 'Second Filing' must be submitted, together with replacement form. Despite the advice given in this 'Any Answers' posting, a second CS01 should not be submitted. Page one of form RP04 lists the documents that must use the 'second filing' route and the CS01 is shown.

    • Court Order

    There is no process by which documents that have been authorised, are correct, are consistent and which have met the filing requirements can be removed from the Register. Should material be required to be removed then the only way is via Court Order under s 1096. On application the Court looks at whether the material is invalid or effective, or has been done without the authority of the company, is factually inaccurate, or is derived from something factually inaccurate, or forged and if found proven only then will the material be removed.

    Reminder

    S 1112 Companies Act 2006 makes it a criminal offence for a person to 'knowingly or recklessly deliver or cause to be delivered' a document that is 'misleading, false or deceptive'. On conviction, the sentence is up to two years in prison, or a fine, or both.

    Further reading

    The Companies House document covering this area and detailing the process undertaken by Companies House can be found in this document 'Registrars Rules and Powers'.

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  2. The Resolver

    The Resolver UKBF Ace Full Member

    Posts: 2,840 Likes: 923
    Many thanks for this Francois and the link (not read as yet).

    The most common 'errors' I come across are when misinformation is intentionally filed. This usually relates to notice of a director having resigned when he had not and nor had there been any properly constituted meeting of shareholders (with Special Notice) to remove him. I have also come across notice of shareholding changes when no transfers had been made. The problem, as you explain, is that CH merely records what they are told and do not proactively establish the truth. If a director has not in fact resigned/been removed then he remains a director notwithstanding the notice at CH.

    You have covered this briefly at the end with s.1112 CA2006. My experience of acting to resolve inter-shareholder/director disputes where false information has been posted at CH is that they will not act on a rectification request without either the agreement of the other parties or an Order of court. I think this only encourages such a situation, especially in smaller companies, since many are not prepared/able to spend monies in court action. Further in the case of false resignation/removal, if the other shareholders hold the majority , a court Order is often a pyrrhic victory since before the hearing they could simply serve proper notice and remove the director correctly at a general meeting. Having said that I sometimes find the delay if they choose to remove lawfully can help the negotiation since within that period the director can begin to exercise his powers (eg requiring the company's accountant to provide information that has been denied him).

    I think there are to steps I would like to see CH take to reduce this problem:-

    1. Flag the risk of a s1112 prosecution much more prominently. I think with the ease in which one can file notices online, many people file false information unaware that they have committed an offence.

    2. Rather than tell people to obtain a court Order , they should set up a dispute resolution process in which to invite the parties to participate.
     
    Last edited: Aug 4, 2017
    Posted: Aug 4, 2017 By: The Resolver Member since: Mar 31, 2006
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