Hamlet was not a particularly happy chap and, indeed, you would not be too far off in saying that he was downright miserable; with good cause given his family situation.
For an accountant in Spain the question is a little more prosaic; whether Spanish company directors, should file, or not to file the annual accounts of their companies; and whether they will turn out to be quite so miserable in due course, if they are caught for non-compliance.
Hamlet lasted until Act 5, scene 2 before Shakespeare mercifully finished him off, thanks to a poisoned sword at the hand of Laertes.
The 30th November marks the deadline by which annual accounts for the year ended 31 December 2019 may be filed. Normally, the deadline is 30 July but Covid-19 put paid to that.
The fact that so many directors ignore the obligation to file accounts is a peculiarity that has never ceased to surprise me since the obligation was introduced by the Ley de Sociedades Anonimas of 1989. The obligation was combined with fines for non compliance of a minimum of 200.000 Pesetas and maximum of 2.000.000 Pesetas. These were not small amounts back then. Today the fines are between 1.200€ and 300.000€ for every year not filed with the highest fines applying to companies with only 6.000.000€ of annual sales.
Late filing is also subject to fines set at 50% of the lower limits.
Lets face it, nothing makes Spanish civil servants happier than slapping a fine on anything that moves, or indeed doesn’t move. The oddest thing is this almost never happens for non or late filing of accounts. Allegedly, the department of Government that is responsible for imposing fines has only two employees, but even with just two employees, they could issue many thousands of fines each year. Perhaps they have been on maternity or paternity leave for the last thirty one years. Perhaps no one has noticed that they expired 30 years ago from boredom and are mummified in an airless and dusty room in the basement of the building.
However, the fines at not the only thing that should worry directors:
- Banks will not provide any form of financing. A really good example of this were the ICO loans available to help Covid-19 affected businesses that were simply not available to defaulting companies.
- The directors may be held to be personally responsible by creditors and shareholders for the company debts and damage caused to the company in the event of insolvency proceedings.
- The company registrar will freeze the company so that acts of the company cannot be given full legal effect. Directors cannot resign or be appointed, share capital cannot be increased and the only changes to the company’s legal status that are permitted are liquidation proceedings. It can take many months and many euros to sort out a company that has got into this position.
- Company accounts provide essential proof of the validity of expenses in the event of a tax inspection and help to prove the losses to be applied against profits of future years.
It is very easy and cheap to buy lists of companies from company report specialists. Very easy too to obtain a data feed that could be integrated into an automatic mailing system that sends out demands and fines to non compliant companies. This could generate millions for the Government and it mystifies me why they haven’t done it yet, given that they are desperate for money. I have a good mind to send them an offer myself to do this on commission. It would be a nice little earner.
Anyway, one day soon someone will realise that the Government is missing out on some serious money and do exactly as I have suggested. You don’t want to be caught out, as Laertes did to Hamlet with his poisoned sword.