CPA Bulletin

Legal NEWS LEGAL: 1 Top Service, the specialist construction credit control company, has become aware of an anomaly regarding the filing of annual accounts with Companies Housewhich is seeing previously large credit limits temporarily plunge to zero, potentially bringing into question a company’s creditworthiness. These credit limits, calculated by credit reference agency computer algorithms, are heavily relied upon throughout the construction industry. All UK limited companies are required to keep accounting records regardless of whether they are trading or not. Every year a limited company is required to file a set of accounts with Companies House, with the detail of the information depending on the size of the company. Even non-trading companies must file ‘dormant accounts’ unless they have a special exemption. Private limited companies have nine months after their year-end to file while public limited companies must file within six months. Credit reference agencies then use sophisticated computer programs to analyse this financial information and suggest a suitable credit limit, but everything hinges on ‘current financial information’. Once the filing deadline has passed the previous year’s accounts are considered to be too old for analysis. Top Service has identified occasions when companies have filed their accounts at the last minute, for example, accounts are filed on the last day of the month which happens to be a Friday. It’s a bank holiday weekend so Companies House doesn’t actually upload the information until Tuesday, so the accounts didn’t make the filing deadline and the credit reference computers may temporarily reduce the suggested credit limit to zero until the new accounts can be analysed. Most limited companies engage a firm of qualified accountants to prepare and file their financial statements and they may routinely be filing very close to the deadline without considering the wider implications. Emma Miller, Company Director for Top Service suggests that Directors of limited companies need to ensure that the company’s annual accounts are signed off well before the filing deadline. This needs to be communicated to their accountant to ensure that the financial statements are being filed at least five working days before the filing date. Some accountants may be in a routine of ‘just in time’ filing so it shouldn’t be assumed that the accounts will be filed as soon as you’ve signed them off. Directors should request a specific date from their accountant on when filing will take place. Any delay on when Companies House uploads the company’s information, may have an adverse effect when this is passed to credit reference agencies for analysis. So, communication is key here. This situation applies equally to all companies, irrespective of size. Top Service has seen companies risking their suggested credit limits of £10m being temporarily reduced to zero, because the accountant has filed the accounts at the last possible moment. The only answer is for company Directors to take responsibility for when their information is actually being submitted to Companies House. For further information on this, please contact Debbie Garner of Top Service on 01527 518800 or email: debbie.garner@top-service.co.uk Is Your Accountant Sabotaging Your Credit Limit? There are occasions when the relationship between an employer and an employee becomes irreconcilable. Thismay lead to a protracted legal dispute brought by the employee, not tomention possible disruption the individual can cause to the business. To avoid this from arising, the employer may consider offering a Settlement Agreement - a monetary sum and an acceptable reference - to the employee in exchange for their resignation from the business. This allows both parties to have a clean break. This option also allows confidentiality to be maintained both during and after negotiations have been completed. For the Settlement to be binding, the employee needs to obtain independent legal advice - normally from a solicitor who specialises in Employment law - before signing any Agreement. An employer may, on occasions, offer to give a financial contribution to the employee’s legal expenses, but they are not obliged to do so; but this offer may help in any Settlement negotiations. Once the Settlement is agreed, and the paperwork signed by both parties, it becomes a binding agreement. If either party fails to abide by it, then a correctly drafted Agreement will outline what penalties the offending party is liable for. Further information on Settlement Agreements can be found on the ACAS website at: https://archive.acas.org.uk/index. aspx?articleid=4395 Settlement Agreements Change of Bank Holiday To coincide with the anniversary of VE Day (Victory in Europe at the end of the Second World War), the Public Holiday for the beginning of May has been moved fromMonday 4th May to Friday 8th May. Employers should note the change, as this may not necessarily appear in some diaries or calendars. 34 CPA Bulletin > February 2020 www.cpa.uk.net