Every company in the UK has to file two documents annually with the Registrar of Companies – their accounts, and a “shuttle return” listing the company’s address, directors, shareholders etc. The dates by which these must be filed are different for each company, but determined by law.
And of course, just like anything that’s determined by law, there has been much argument over what that law actually means.
I discovered a wonderful case recently in the Company Law Reports: Registrar of Companies v Radio-Tech Engineering. The rule for accounts is that they must be filed within 10 months of the financial year end. This company’s year end fell at the end of September, and so they filed their accounts at the end the following July, on what they believed to be the latest possible date for filing. They were promptly hit with a £100 fine for late delivery!
The argument boiled down to whether or not 10 months from September 30th is July 30th or July 31st. As accounting periods end on the last day of the month, the company claimed it was only natural for the filing period to run to the last day of the month as well. The Registrar claimed that 10 months from any date was until the equivalent date in that following month.
This followed a ruling by Lord Diplock in Dodds v Walker, where he stated that: “the general rule is that the period ends on the corresponding date in the appropriate subsequent month, ie the day of that month that bears the same number as the day of the earlier month on which the notice was given. … Because the number of days in five months of the year is less than in the seven others the inevitable consequence of the corresponding date rule is that one month’s notice given in a 30-day month is one day shorter than one month’s notice given in a 31-day month and is three days shorter if it is given in February.”
It was claimed that such a rule is “simple”. But anyone who’s ever had to deal with date calculations knows that nothing is simple in this field.
Thankfully Lord Russell provided a further refinement of the rule in the same case: “Sometimes it is not possible to apply directly the principle, for instance if a four-month notice is served on 30th October (the time beginning to run at midnight 30th-31st October), there being in February but 28 (or 29) days it is not possible to find a corresponding date in February and plainly a corresponding date cannot be sought in March; the application of the corresponding date principle in such case can only lead to termination of the four-month period at midnight 28th February-1st March (or midnight 29th February-1st March in a leap year). That is an inevitable outcome.”
With such a ruling by the House of Lords many years earlier, it seems Radio-Tech had had no chance. But that was nothing compared to the case taken by Pow Trust and its subsidiary, Al’s Bar and Restaurant, against their similar fines. Faced with Â£100 fines each, they argued (in “protracted correspondence”) that they were a charity with limited funds, and they were only late by a couple of weeks anyway, and one of the two directors had been sick at the time. The Registrar didn’t budge, and so they sought judicial review to quash the penalties, claiming, for good measure, that the fine was an unlawful breach of their human rights.
If ever a case was doomed for failure this was it. The judge ruled against them in every way, stating that the Registrar did not have the discretion to waive the fine, as it was imposed by the Act, not the person. He then raised the obvious question: if the charity had such limited funds that it would challenge a £100 fine, what was it doing undertaking such expensive and speculative litigation – particularly without even taking legal advice. He then referred the matter to the Charity Commission for investigation.
Fighting the registrar doesn’t seem to be a good idea!
Didn’t the company have a reminder from the registrar? Maybe that would have had the last date for filing stated within it.