An Tánaiste, Ms Harney's Department has taken responsibility for a mix-up that forced the State to repay almost €1.4 million to 9,876 companies that were wrongly penalised for filing late returns.

Mr Paul Haran, secretary general of the Department of Enterprise, Trade and Employment, told the Dáil's Public Accounts Committee yesterday that the error was the Department's fault.

The mistake occurred following the enactment of part of the Company Law Enforcement Act, 2001, which came into force on March 1st, 2002. This required companies to file accounts and annual returns within 28 days of their statutory annual return date.

Failure to do this can lead to fines of up to €1,200. Companies were allowed a three-month transitional period to bring themselves in line with the new rule. That ended on June 4th, 2002.

The Companies Registration Office began applying the provisions from that date. But one of its lawyers discovered the following December that the Tánaiste had not made the necessary fees order increasing penalties for late returns. This meant that these rules effectively did not apply.