Q – We missed the Annual Return Date (“ARD”) filing deadline for our Company. What options do we have if we want to retain the audit exemption?
DO NOT FILE!! Sorry to be so dramatic but if you file the late annual return, you lose potentially the only option you have to retain the audit exemption and avoid paying late filing penalties.
Every company has an Annual Return Date (“ARD”) and is required to complete the following steps within 56 days:-
- Prepare the annual return in CORE (or Company Secretarial software)
- Upload its financial statements,
- Generate the signature page and have it signed by a director and secretary
- Upload signature page and pay filing fee
If all the steps are not completed within the 56 days of the ARD then the company is deemed to be late. This results in the company losing its audit exemption (if it was entitled to the claim the exemption) and late filing penalties imposed of €100 penalty plus €3 per day for every day the annual return is late.
Also, if a company files its annual return early it must complete the filing process within 56 days of the earlier date (not the original ARD) otherwise the company is deemed to be late.
The company may file the late annual return and the audit exempt financial statements and pay the late filing penalties however the company will have to file audited financial statements for the following two financial years.
The company will be placed on the involuntary strike off list if it does not file the late annual return within 180 days of its filing deadline. The company will then have 8 weeks to file the late return otherwise it will be struck off the Register of Companies.
Strike off Listed
If the company has received a strike off notice from the CRO it has a very short window to make the application as the company only has 56 days from the date of the notice to:
- File the outstanding annual returns, (audited) financial statements and pay the late filing penalties or
- Apply to the District Court for an extension of time to file.
District Court Application
The only option to retain the audit exemption and/or avoid paying late filing penalties is to apply to the District Court for a Section 343 Order. The Order:
- Extends the filing 56 filing deadline to typically 28 days after the order is granted.
- Once the company files within this extended deadline the company is deemed to have filed on time.
This means there is no loss of audit exemption or late filing penalties imposed.
What the Court Order DOES NOT DO :
- Grant an order if the late return is already filed.
- Change the ARD of the company.
- Grant audit exemption if the company was not entitled to claim it for the late financial year (e.g., if the company filed the last annual return and financial statements late or not under the audit exemption thresholds).
The company must have a legitimate reason for not filing its annual return and any supporting evidence would help with the application. The judges do not appear to be accepting Covid interruption as being a valid excuse any longer so a legitimate reason with supporting evidence will help with making a successful application.
It may be difficult to obtain the order if the company has filed late in the previous 5 years or has made a previous application.
Also, if the late return is the first annual return this does not affect the company’s ability to claim the audit exemption so may not be worth applying to the District Court.
Finally, if the company has more than one annual return outstanding, the one application can be made for all the outstanding annual returns so there is a cost saving for having more than one late return.
How Can CLS Help
We would be delighted to assist with making the application to the District Court. The application form may be completed on our website
If you have any queries on the process, please feel free to contact any of the team on 059-9186776 or info@clscs.ie
Note: The content within the newsletter is provided for information purposes only and does not constitute legal or other advice.
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