What happens if my company has years of unrecorded accounts or unfiled statements?
The company and its officers may face compounds or prosecution for missing records and late filings, and LHDN may raise estimated assessments. The usual way forward is to rebuild the books, file the overdue statements and returns, and settle compounds. Get professional help early.
Neglect does not make the duty disappear.
Companies Act exposure
- Failure to keep records under section 245 is an offence, with a fine of up to RM500,000, imprisonment of up to three years, or both on conviction
- Late circulation or lodgement of financial statements and late annual returns are separate offences; SSM frequently offers compounds
- Directors are individually exposed, and persistent default can lead to scrutiny of the directors
Tax exposure
- LHDN can estimate income and issue assessments where returns are missing, which can be higher than the true figure
- Penalties and surcharge may apply; the tax section covers rates
What to do
- Stop adding to the backlog; start recording current transactions now
- Rebuild past years as in the catch-up answer
- Prepare and lodge the oldest filings first
- Ask SSM and LHDN about compound or voluntary disclosure options; terms change, so check current notices
- Document the reasons for the delay
There is no limit on how many years can be caught up, but the longer you wait, the more the cost.
Legal basis
- Companies Act 2016, s.245(9)
- Companies Act 2016, s.258-259
- Income Tax Act 1967, s.90
Sources
Applies to 2026 · Last reviewed 29 October 2026
General information for business owners, not legal, tax or professional advice. Rules change, so check the sources or ask a licensed professional before you act.
Related questions
- How do I catch up on bookkeeping that has been neglected for a year or more?Gather every document and all bank statements, set a cut-off date, then record month by month starting from the oldest period, reconciling banks as you go. Fix the biggest gaps first and get professional help for anything unclear. File overdue statements and returns as soon as the books are ready.
- How long must a Malaysian company keep its accounting records?A company must keep accounting records for seven years after the transactions they record were completed. For tax, documents must be kept for seven years from the end of the relevant year of assessment. Use whichever period ends later.
- How soon must transactions be recorded in the books?Under section 245 of the Companies Act 2016, entries must be made in the accounting records within 60 days after the transaction is completed. Leaving the books for a full year-end rush is therefore not compliant.
- How do I choose my company's financial year end?You choose it, usually when you incorporate, and it is not fixed to 31 December. Pick a date that suits your business cycle and your accountant's workload; every later deadline for financial statements and filings is counted from it.
- Can a company change its financial year end, and how?Yes. The Companies Act 2016 does not state a maximum length for a financial year or how often it can change. But a new year end that pushes the circulation or lodgement date later needs an extension of time from SSM, applied for before the original deadline. A subsidiary's year end must also stay in line with its Malaysian holding company's.