EXCLUSIVE by OUR BUSINESS STAFF
The revelation that Companies House has not issued a single penalty notice for late filing of annual accounts by the directors of the Avocet Group of "disruptive technology" companies has left some shareholders appalled, angry and frustrated.
A number of the businesses are now insolvent and in the hands of liquidators or administrators with investors fearing they may have lost millions of pounds.
The failure to impose sanctions on Avocet directors including Martin Frost and Dr Robert Jennings - joint life presidents of Avocet firms - has been attacked by critics. And the entire Companies House penalties system has been branded 'not fit for purpose'.
The failure to lodge accounts and confirmation statements on time is a criminal offence, according to Companies House regulations. In the case of Avocet's separate entities, management has repeatedly failed to meet deadlines for the submission of financial information.
In a bid to establish how many penalty notices had been slapped on those who have served as directors of Avocet businesses, a Freedom of Information request was sent to the Information Rights team at Companies House.
The requester wrote: "Companies House stipulates the following list of penalty fees for private companies whose directors file their accounts late: not more than one month £150; 1-3 months £375; 3-6 months £750; Six months plus £1,500.
"The regulations go on to state 'Penalty doubled if accounts are filed late in two successive financial years'. Companies House also makes clear: 'Not filing your confirmation statements, annual returns or accounts is a criminal offence and directors could be personally fined in the criminal courts'.
"Therefore: Please provide me with details of all individual late filing penalty notices served on the following registered companies, this to include dates when notices were served, the amount being sought, and the amount which has peen paid to Companies House. Also provide details of all referrals for criminal prosecution against the directors of each company."
The companies named in the FOI request were Avocet Natural Capital PLC (accounts overdue since December 28th 2020); Avocet Faculties Ltd (September 27th 2021); Omega Infinite PLC (December 24th 2019); Avocet IP Ltd (September 30th 2021); and Orrdone Farms Ltd (December 24th 2019). In each case, confirmation statements were also overdue although these do not attract monetary penalties.
Companies House, in their response, has told the requester: "Civil late filing penalties are issued on accounts when they are filed late. The value of the penalty is determined by how late the accounts are filed and only levied on receipt of the accounts. Until accounts are filed, a penalty is not issued. In the case of the companies listed, the accounts you have indicated have not been filed, therefore a penalty has not yet been levied and penalty notices have not been issued."
The business regulator also explained that once a company is in any type of insolvency it is no longer required to file confirmation statements or accounts. And there is no late filing penalty for any insolvency documents.
The FOI response concluded: "Two of the companies listed have an active proposal to strike off. This is compulsory strike off initiated by the Registrar of Companies as they appear to be defunct and no longer in operation as they are in default of their filing obligations. Once companies are in the process of being struck off the register, the Registrar of Companies ceases active pursuit of any outstanding statutory documents."
These disclosures have incensed some of those seeking to find out what happened to their cash.
One investor told us: "Companies House have, amazingly, managed to design a system which actually rewards directors for continued noncompliance with the statutory disclosure requirements, and the result is that likely many shareholders are deprived of much-needed, timely information about the companies in which they have invested.
"A properly-designed framework would see directors personally fined for each month that statutory disclosure requirements are not met. This would not only immediately improve compliance, but as a side benefit, directors would likely proactively remove any dormant companies from the register rather than waiting for Companies House to do so, thus reducing administrative costs.
"Whoever in government is responsible for the current absurd policy should be ashamed of themselves. It is neither in the best interest of the country’s shareholders nor of Companies House."
Another observer of the Avocet saga remarked: "Nothing surprises me, and the banal response to the FOI request is entirely as I would have anticipated from a public body with no accountability to anyone. It mirrors the complacent attitude of the insolvency service."
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