If your company is already struggling, discovering that its annual accounts are overdue can feel like another obstacle to getting it closed. You might assume you need to pay your accountant to bring everything fully up to date before you can even start discussing liquidation.
That is not usually the case. You do not normally need to wait for overdue statutory accounts to be filed before seeking advice about a Creditors’ Voluntary Liquidation (CVL). What matters is that the company’s underlying financial records are preserved and that enough information is available to establish its current financial position.
Accounts overdue and the company cannot pay its debts?
You do not usually need to wait for every set of statutory accounts to be filed before discussing liquidation. Anderson Brookes can help you establish what information is actually needed and what should happen next.
Do You Need to File Overdue Accounts Before Liquidation?
If your company is insolvent and needs to enter liquidation, overdue statutory accounts do not usually need to be brought fully up to date before the process can begin. However, there is an important distinction between statutory annual accounts and the company’s underlying financial records.
Statutory accounts are the year-end documents normally filed with Companies House. They include information such as the company’s balance sheet and profit and loss account. Companies that remain active are ordinarily required to prepare and file them, even if they are not currently trading.
The underlying accounting records are different. These include the information from which accounts can be prepared, such as bank statements, invoices, bookkeeping data, payroll records and records of the company’s assets and liabilities.
The government’s guidance on preparing and filing company accounts confirms that companies must maintain records showing money received and spent as well as their assets and liabilities.
If the business cannot pay its debts, you should not automatically delay insolvency advice for weeks or months while an accountant completes historic statutory accounts. Speak to the proposed insolvency practitioner first so they can establish what information is actually needed.
Don't confuse overdue accounts with missing records
You may not need to file a full set of overdue statutory accounts before liquidation, but you still need to preserve the company's accounting records.
Bank statements, invoices, payroll information, tax records, bookkeeping data and details of company assets and debts may all be required by the liquidator.
Do not delete records, dispose of paperwork or allow access to accounting software to lapse simply because the company is closing. Directors must provide relevant company information and paperwork to the appointed insolvency practitioner.
Not sure what you need to keep? Use the form below or call Anderson Brookes on 0800 1804 935 for free, confidential initial advice.
What Does the Liquidator Need if Your Accounts Aren’t Up to Date?
The liquidator does not necessarily need a polished set of recently filed annual accounts to begin understanding the business. However, they do need enough reliable information to establish what the company owns, what it owes and what happened financially before liquidation.
Depending on the company, that could include:
- recent company bank statements
- bookkeeping records and management accounts
- lists of suppliers and other creditors
- details of money owed by customers
- VAT, PAYE and Corporation Tax records
- payroll information
- loans and finance agreements
- details of vehicles, equipment, stock and other assets
- director’s loan account information
- contracts and leases
- information about significant recent payments or asset transfers
When a liquidator is appointed, directors are required to provide information about the company and hand over its records and paperwork. The Insolvency Service’s current guidance on directors’ duty to co-operate also makes clear that directors may need to answer questions and provide a Statement of Affairs.
Bank records can be particularly useful where formal accounts have fallen behind. Our guide to what liquidators look for in bank statements explains how transactions can help the liquidator understand what happened to company money before insolvency.
What Is a Statement of Affairs?
A Statement of Affairs is different from a normal set of annual accounts. It provides a snapshot of the company’s financial position for insolvency purposes. It typically includes information about:
- assets owned by the company
- estimated values of those assets
- secured creditors
- other company debts
- creditor claims
- the expected shortfall
The purpose is to help establish what is available and how much the company owes, rather than to replace every historic accounting requirement. You can find a plain-English explanation of the Statement of Affairs in our company closure and insolvency forms directory.
If your accountant has not completed the company’s latest statutory accounts, the insolvency practitioner can explain what information is needed to establish this current position.
What Happens to Overdue Companies House Accounts Once Liquidation Starts?
Until the company formally enters liquidation and Companies House receives the relevant insolvency documents, normal filing obligations continue to apply. Once formal liquidation has commenced, the position changes.
Companies House guidance has stated that once a company is in liquidation and the statutory liquidation documents have been registered, directors do not need to continue filing the normal annual accounts during the liquidation. The liquidator instead has their own statutory reporting and filing responsibilities.
That does not mean liquidation retrospectively makes previous filing failures disappear. If accounts were already overdue, they were still overdue before the liquidation began.
The practical point for an insolvent company is that you should speak to the insolvency practitioner before spending scarce funds bringing several years of statutory filings up to date solely because you assume liquidation cannot proceed without them.
What Happens to Companies House Late Filing Penalties?
Companies House can impose automatic penalties where annual accounts are delivered after their deadline. For a private limited company, current late filing penalties are:
| How late the accounts are | Penalty |
|---|---|
| Up to 1 month | £150 |
| 1 to 3 months | £375 |
| 3 to 6 months | £750 |
| More than 6 months | £1,500 |
The penalty is doubled if the company’s accounts are late in two successive financial years.
A Companies House late filing penalty is normally a company liability. If the company enters an insolvent liquidation, tell the insolvency practitioner about any outstanding penalties or correspondence you have received. However, a company penalty should not be confused with a director’s wider responsibilities. Persistent failures to maintain records or co-operate with the liquidator can raise separate conduct concerns.
What if Companies House Has Started Strike-Off Action?
Overdue accounts can sometimes lead to Companies House beginning compulsory strike-off action. If you look up the company and see an active proposal to strike off, first establish why it has appeared. It may have arisen because Companies House has started the process following missed filing obligations rather than because the directors applied to close the business.
If the company has no debts or unresolved affairs, strike-off may sometimes progress without difficulty. The situation is very different where the company owes HMRC, suppliers, lenders or employees.
Do not assume that compulsory strike-off solves insolvency. Creditors can object, the strike-off can be suspended and debts do not simply become something directors can ignore while waiting for Companies House to remove the company.
Accounts overdue and strike-off has started?
If the company also owes HMRC, suppliers, lenders or other creditors, don’t assume compulsory strike-off will solve the problem. Anderson Brookes can help you establish whether liquidation or another route is appropriate.
Do You Need to Submit Overdue Tax Returns Before Liquidation?
Companies House accounts and tax returns are separate obligations. A company whose statutory accounts are overdue may also be behind with Corporation Tax returns, VAT returns, PAYE reporting, CIS returns or other tax filings. You should tell the insolvency practitioner exactly what is outstanding.
The answer is not necessarily to delay liquidation while you personally try to complete every historic tax filing. Instead, the practitioner needs to understand what information exists, what HMRC is owed and what still needs to be dealt with as part of establishing the company’s tax position.
If unpaid tax is a significant part of the problem, our guide to closing a limited company with HMRC debts explains the options available where VAT, PAYE, Corporation Tax or other liabilities cannot be paid.
Don’t ignore correspondence from HMRC simply because you intend to liquidate the company. Pass it to the insolvency practitioner so it can be considered as part of the wider position.
What if Your Accounting Records Are Incomplete or Missing?
There is an important difference between accounts that have not yet been prepared and financial records that no longer exist. Perhaps your bookkeeping is complete but the accountant has not prepared last year’s statutory accounts. That is very different from having no bank statements, invoices or transaction records at all.
If information is missing, start by identifying what can be recovered. Bank statements may be available through online banking. Your accountant may hold bookkeeping exports or previous ledgers. Suppliers may be able to provide duplicate invoices, while payroll or cloud accounting platforms may still contain historical records.
HMRC guidance says that where company records are lost, stolen or destroyed and cannot simply be replaced, directors should do their best to recreate them and tell HMRC where required.
Don’t invent transactions or figures simply to fill gaps. Tell Anderson Brookes what is missing, what can be retrieved and where other records are held. A liquidator can then assess the position using the information available.
What Should You Do If the Accounts Are Overdue and the Company Is Insolvent?
Don't delay insolvency advicee
You don't need a perfect set of accounts before having an initial conversation with Anderson Brookes.
If the company cannot pay its debts, getting advice early is more important than waiting for an accountant to complete months of historic work before making contact.
Preserve the underlying records
Download bank statements and save bookkeeping data, invoices, payroll records, tax documents and other financial information.
Make sure you retain access to cloud accounting platforms and tell your adviser where physical or digital records are held.
Identify what's overdue
Make a simple list of outstanding Companies House accounts, confirmation statements and tax returns.
If the company also owes PAYE, Corporation Tax or other HMRC liabilities, make sure these are identified as part of the wider insolvency position.
List the company's assets and creditors
Record what the company owns, who it owes and any money customers still owe to it.
Include HMRC liabilities, loans, finance agreements and amounts involving directors or connected businesses.
Put the insolvency practitioner in touch with your accountant
Your accountant may hold valuable information even where the statutory accounts themselves have not been completed.
Giving permission for the relevant information to be shared can make it easier to establish the company's position.
Check what actually needs completing
Before paying for several years of historic accounts to be prepared, ask whether doing so is genuinely necessary.
Anderson Brookes can establish what information is required for the proposed Creditors' Voluntary Liquidation and what should happen to outstanding filing obligations.
Accounts behind because the company is struggling?
Overdue accounts are often one symptom of wider financial pressure. Answer a few questions about the company’s debts and trading position, and Anderson Brookes can help you understand the available options.
Overdue Accounts and Liquidation FAQs
Do I have to file overdue accounts before a CVL?
Not usually as a condition of starting the process. If the company is insolvent, you should speak to a licensed insolvency practitioner rather than delaying advice solely to complete historic statutory accounts. You will still need to preserve and provide the underlying financial records needed to establish the company’s position.
Can a company enter liquidation if its accounts are years behind?
Potentially, yes. Having seriously overdue accounts does not automatically prevent an insolvent company entering liquidation. However, the greater the gaps in the company’s records, the more information may need to be reconstructed or explained.
What records will the liquidator ask me for?
This depends on the company, but common records include bank statements, invoices, bookkeeping information, tax records, payroll information, creditor details, asset records, finance agreements and information about transactions involving directors or connected parties.
What happens to Companies House late filing penalties in liquidation?
Late filing penalties already imposed are normally liabilities of the company. Tell the insolvency practitioner about them and provide any correspondence received from Companies House.
Can missing company accounts get me disqualified as a director?
Simply having an overdue set of accounts does not automatically mean you will be disqualified. However, failing to maintain adequate company records, deliberately withholding information or refusing to co-operate with the liquidator can be much more serious. Directors should preserve whatever records exist and explain any gaps openly.
What if my accountant has all the company records?
Tell the insolvency practitioner who the accountant is and what information they hold. Directors remain responsible for co-operating with the liquidation, but records do not all need to be physically in your possession if they can be obtained from the company’s accountant or other providers.
Do I still need to deal with overdue VAT or Corporation Tax Returns?
Do not assume outstanding tax Returns disappear because the company is entering liquidation. Tell your insolvency practitioner which Returns are overdue and provide the available tax and accounting records. They can advise what still needs to be completed and how the company’s historic HMRC liabilities will be dealt with.
Get Advice Before Paying to Bring Every Account Up to Date
When accounts are overdue, it is easy to assume that liquidation has to wait until your accountant has caught up with everything. That can mean spending limited company funds, or even your own money, on historic account preparation before you know whether it is actually required.
Speak to us first. At Anderson Brookes, we can review what records are available, establish the company’s current financial position and explain whether a Creditors’ Voluntary Liquidation is appropriate. You do not need to arrive with perfect accounts before having that conversation.
If your company cannot pay its debts and its filings have fallen behind, call Anderson Brookes on 0800 1804 935 for free, confidential initial advice from a licensed insolvency practitioner.