Even if you live in the UK you may not have heard of The Legal Aid, Sentencing and Punishment of Offenders Act 2012 which was given royal assent on 1st May 2012. However, if you run a UK company or are a director, those trivial fines for minor breaches of laws such as the Companies Act 2006 or the Health and Safety at Work Act 1974 are being uncapped. Therefore, for example, boards of directors and English companies will face unlimited fines or penalties for failing to file accounts or annual returns; in 2010/11 over 5,000 directors were prosecuted for these offences alone; expect that figure to increase exponentially over the coming years.

Since Companies House and other governmental departments are no doubt all cash strapped the advice from Faire Sans Dire is make sure you or your legal advisers read the small print of this Act because it applies to a host of other Acts including the Data Protection Act 2008, the Environment Protection Act 1990 and the Financial Services and Markets Act 2000 to name but a few. No doubt all those who enforce the legislation affected will be rubbing their hands with glee once they can start chasing larger companies and repeat offenders.

Sadly this has quite paradoxical consequences. Effective from 1st October 2012 if a UK company is found not guilty of an offence it is charged with then broadly speaking were it to successfully defend itself against the charges it can no longer reclaim from the State any (or the bulk) of the costs it incurs. This arises because of consequential changes to the Prosecution of Offences Act 1985 and applies to cases heard in both Magistrates and Crown courts.

As defence costs particularly in Crown courts can easily reach tens of thousands of pounds even in relation to relatively minor breaches of the law, notwithstanding that a company is totally innocent of charges made against it, it may be cheaper to plead guilty to those than defend them. Either the law is an ass or legal fees are still unrealistic!

This article was first published on 6th September 2012.

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