A More Forgiving Approach to Late Filings
Good news! As of July 16, 2025, the rules around audit exemptions for small and micro companies in Ireland are changing. Previously, a single late filing of your annual return could automatically strip away your audit exemption, leading to significant extra costs and administrative burden.
Now, under the new Companies (Corporate Governance, Enforcement and Regulatory Provisions) Act 2024, this will no longer be the case for a first-time late filing within a five-year period.
Why the Change? Easing the Burden on SMEs
Minister Peter Burke highlighted that losing an audit exemption due to a late filing can have a “disproportionate impact” on small businesses. The costs associated with providing two years of audited financial statements can be substantial. This new measure aims to ease the burden on our vital SME sector, reducing paperwork and regulatory obligations while still emphasising the importance of timely filings.
What Does This Mean for Your Business?
Let’s break down the key points of Section 22 of the new Act, which replaces Section 363 of the Companies Act 2014:
- First-Time Forgiveness: If your small company has a late annual return filing, you generally won’t lose your audit exemption for the following two years, provided it’s the first time this has happened within a five-year period.
- When You Will Lose Exemption: You will still lose your audit exemption for the subsequent two years if you fail to deliver your annual return and have already had a late filing in any of the previous five financial years.
Are You a ‘Small Company’?
Just a reminder of how a ‘small company’ is defined under the 2014 Act (you need to meet two or more of these criteria):
- Your group’s balance sheet total doesn’t exceed €7.5 million.
- Your group’s turnover doesn’t exceed €15 million.
- The average number of employees in your group doesn’t exceed 50.
Retaining Fees, Reducing Penalties
It’s important to note that late-filing fees will still apply in all cases of overdue annual returns. However, this new approach prevents small businesses from being hit with the double whammy of late fees and the significant costs of losing their audit exemption for a one-off slip-up.
This is a sensible change that acknowledges the realities of running a small business and provides a bit more flexibility while still encouraging compliance.