Penalty for Non-filing of LLP annual returns – Can winding up save penalty?

Although Limited Liability Partnership is one of the most popular forms of starting a business, there are various compliances which are required to be followed annually once the business is incorporated.

The Annual Compliances of LLP primarily include:

  • Filing of Annual Return of the LLP in Form 8 – Due date 30th October of the succeeding FY
  • Filing of Financial Statements of the LLP in Form 11 – Due date 30th May of the succeeding FY

Penalty for Non-filing

Late Filing of Form 8 and Form 11 attracts a late fee of Rs.100 per day each per form immediately after the due date till the date the form is actually filed.

In view of the above, one can understand the huge of penalty that can be imposed if there is a substantial delay in filing the annual forms. One should note that these are online forms and cannot be filed without making the fee payment, in any case.

We get numerous queries from many people who formed their LLP but did not carry out any business since the date of incorporation. The most common questions that arise at this point are:

Is it compulsory to complete the annual filings even if the business has not commenced or not been conducted throughout the year?

Yes, it is absolutely compulsory to complete the Annual Filings even if your business has not commenced or not been conducted throughout the year. There is no exemption to annual filings.

Can the LLP be closed without completing the Annual Filings?

No, it is important to complete the Annual Filings before closing down or winding up the LLP.

Many partners of LLP’s are under the impression that if they wind up the LLP, they can avoid the Penalty on non-filing. But unfortunately, this is not the case.  An LLP cannot be wound up without completing the pending compliances as the process of Annual Filings and Winding up is inter-connected. The LLP can be wound up only when all the ROC compliances are up to date and MCA records are updated in this regard.

Conclusion:

Partners of LLP’s should understand that winding up of the business is not the solution to escape the imposition of penalties.  Rather they have to comply with all pending filings and update the ROC with the status of affairs, may it be for continuing the business or discontinuance.

In view of the above it is utmost important to get your LLP incorporated from experienced and responsible professionals who could guide you in complying with the ROC Compliances.

Nikita Bhatia is the co-founder of VenturEasy, an online platform for Company registration, book-keeping, accounting, tax consultancy and legal compliances in India. A Chartered Accountant and company secretary by profession, she has wide experience in the fields of audit, accountancy, taxation and corporate governance.