Who needs to file Annual Returns in Ireland?
All Irish Limited Companies must submit the Annual Return, even if they have not conducted business transactions during the year.
Companies file their Annual Return using Form B1 and submit it to the Companies Registration Office (CRO) once a year. This comprehensive document provides important information about a company’s financial and legal status. Financial statements are a critical component that companies must include in the Annual Return submission.
A missed Annual Return Deadline can have significant consequences for a company and its directors. The severity of these consequences varies depending on whether the Annual Return includes financial statements.
This guide will explain the consequences of a missed Annual Return and what you should do if you file a late Annual Return.
When is the Annual Return late?
In Ireland, there is a 56-day deadline for filing Annual Returns. All companies in Ireland have an effective date on which the Annual Return is due, determined by its incorporation date.
The 56-day deadline refers to the timeframe within which a company in Ireland must file its Annual Return after the effective date.
In other words, you have 56 days after your company’s effective date to submit the Annual Return to the CRO. If the Annual Return is not filed within these 56 days, you will be faced with a late filing fee of €100 and a daily late fee of €3 starts accruing for every day over the 56 days.
The 56-day deadline is the initial window for a company to file its Annual Return without incurring the initial late filing fee. It’s a crucial timeframe for ensuring timely compliance with the filing requirements and avoiding penalties.
What happens if you miss the Annual Return Deadline?
No financial statements – a company’s first Annual Return deadline
- Late filing penalty: The company will incur late filing penalties with the (CRO. These penalties increase daily until the Annual Return is submitted to the CRO.
- Involuntary strike-off: If the Annual Returns are not filed, the CRO has the authority to involuntarily strike off your company from the register after a year of non-compliance. This action can result in the disqualification of all directors associated with the company.
Annual Return missed with financial statements
- Late filing penalty: Similar to the scenario without financial statements, the company will face late filing penalties that escalate daily until the Annual Return is submitted to the CRO.
- Loss of audit exemption: If a company misses the Annual Return filing deadline, it may lose its audit exemption status for the next two years. This means the company would be required to undergo a statutory audit of its financial statements during that period.
- Involuntary strike-off: Just like the first scenario, failure to file Annual Returns, even with financial statements, can lead to the CRO initiating an involuntary strike-off process.
What to do if you miss the CRO deadline?
Appeal to the court if needed
If extenuating circumstances led to the late filing, you may be able to appeal to the District Court. However, this is a last resort, as court proceedings can be time-consuming and costly.
Assess if it's your company's first Annual Return
If you are a new company and it is your company's first Annual Return, you must pay a fine to the CRO, and fortunately, you do not lose the audit exemption.
Prepare the Annual Return paperwork
We recommend engaging with a professional company secretary to ensure a smooth and streamlined process.
Engage an accountant for financial statements
The financial statements are typically prepared by an accountant. We advise engaging with a chartered or certified accountant to assist in preparing accurate and compliant financial statements. This is crucial for the Annual Return filing process.
Pay late Annual Return filing penalties
Late filing fees for Irish Annual Returns include an initial €100 payment due after the 56-day filing deadline, followed by a daily €3 fee accruing after that, up to a maximum of €1,200 per Return.
Review and improve internal processes
This is an opportunity to enhance your company's annual return procedures. Consider outsourcing the administration to a professional company secretary and preparing financial statements to an accountant. Investing in outsourcing can be more cost-effective than paying fines or auditors, making it a worthwhile investment.
Consequences of a missed Annual Return
Failure to file Annual Returns by the deadline can result in significant consequences for directors and companies in Ireland, and the severity of the consequences may vary depending on whether financial statements are included.
Timely and accurate submission of the Annual Return, along with the required financial statements, is crucial for maintaining the company’s compliance, avoiding financial penalties, retaining audit exemption status, and preventing potential disqualification of directors.
We advise company directors to be fully aware of their responsibilities and deadlines related to Annual Return filing and seek professional guidance to ensure proper compliance with Irish company law.
Moreover, it is pertinent to note that late filing of income tax returns can also incur substantial fines and penalties. It is therefore advised to adhere to the income tax return deadlines diligently to maintain a healthy financial standing and avoid unnecessary complications.
Tom is a Fellow Chartered Certified Accountant (FCCA) and Chartered Tax Advisor (CTA) and is Accounting Team Manager at Accountant Online. Areas of expertise include Accounting, Compliance, Taxation relating to small business and company directors.