Change in Accounting Period

Company’s financial year normally runs for the time period of 12 months but you can change it as per your choice and make it more or less than 12 months. It is also known as “Accounting reference date”. Your company can only make changes to the current financial year or the immediate previous year. Getting changes to your company’s year-end will also result in changes to deadline for filing accounts unless you’re lengthening your first financial year of the company.

• Rules for changing financial year end
• Applying online via Company’s house service
• Applying by post
• Changing Company’s corporation tax accounting period
• In case you’re accounting period and financial year are different
• If your accounts cover more than 12 months
• If your accounts cover less than 12 months

Rules for changing financial year end

There are certain rules every company needs to follow in order to shorten or lengthen their company’s financial year. You can shorten the financial year of your company as many times as you can. The minimum period for which it can be shorten is 1 day.

If you want to lengthen your company’s financial year, you need to follow certain rules which are shown as under –

1. If your company is in administration, you can maximise it by 18 months or longer.
2. You can maximise it once in a 5 year.
3. Financial year can only be lengthen more often than every 5 years in the following cases –
   1. If your company is in administration
   2. If you are aligning dates with subsidiary or a parent company
   3. If you have received company’s house special permission to do the same.

Note – If your company accounts are overdue, you cannot change the financial year of the company.

Applying online via Companies house service

The easiest way by which you can change your company’s financial year is by way of applying it online through Companies house. In case you have done any change in your limited company, you must notify it to Companies house which includes –

1. Change in the personal details of directors and company secretaries.
2. New appointment or resignation of directors and company secretaries.
3. Change in name of the company.
4. Change in registered office address of the company.
5. Change in accounting reference date.
6. Change in Company’s share structure such as issue of new shares.
7. Change in the place you keep your company records (if different from registered office address).
8. Details about Records you keep at an alternative address.
9. Changes to information related to “People with significant control”.
10. Details of any mortgages – new or paid off.

Also See: Reporting changes to Companies House

What you must have to apply online?

1. You must have a valid e-mail address and password in order to sign up for the Companies house service online.
2. Authentication code sent to you by Companies house.

In case you didn’t used this service before

If you are a first time user and didn’t need used this service before, give a valid e-mail address and create a new password to sign up for this service online. After signing up, one authentication code will be sent by Companies house to your registered office address.

When the changes take effect?

Changes to your address can only take effect officially when it gets registered at Companies house. Changes made to the Company’s name will also take effect, when you register it with Companies house. After registration, new certificate with the company name will be issued to you along with the date of registration.

Applying by post

In case you want to apply for change in accounting period through post, you just need to fill an application form and send it to the address given on the form.

Changing Company’s corporation tax accounting period

When you change your company’s year-end at Company’s house, it generally affects accounting period of your company for corporation tax. Shortening or lengthening of your financial year decides what you need to do further.

Accounting periods for corporation tax

The time covered by your company tax return is the accounting period for Corporation tax. Normally, the accounting period is of 12 months i.e. same as financial year. It might be different in the year of Company’s incorporation. Deadlines for the payment of corporation tax and filing company tax return also get affected by the accounting period.

Check your accounting period

In order to check the date of your accounting period, sign into your HMRC’s business tax account via online with your government gateway user ID and password.

Your first accounting period

When you register your company for corporation tax, HMRC sent you a letter containing dates of your accounting period. In case you found that the dates provided are wrong, kindly contact HMRC immediately.

Also See: How to Pay Companies House Late Filing Penalties?

In case you’re accounting period and financial year are different

A situation may appear when your accounting period is different from the financial year. It may be different in the following circumstances –

1. In the first year of your business
2. At the time of business restart
3. If you stop business trading and become dormant.

Like the above mentioned points, accounting period can differ from your financial year in the following situations –

1. When your accounts cover more than 12 months because of your lengthening of the company year.
2. When your accounts cover less than 12 months because of your shortening of the company year or closing of the company.

If your accounts cover more than 12 months

In case your accounts cover more than 12 months, you need to file 2 returns as normally the accounting period cannot be longer than that of 12 months.

If your accounts cover less than 12 months

Normally, an accounting period ends after 12 months but it can be shorter than 12 months too. In case you are filing your company tax return by using HMRC’s online service, contact HMRC and update your dates of accounting period before filing tax return whereas if you are filing returns through accounting software, you must enter the new dates into the software and update the accounting period before filing tax return.

In case you want more information or advice on Change in Accounting period, kindly call us on 03330886686 or you can also e-mail us at enquiry@dnsaccountants.co.uk

About the author

Arun Sharma
I am a fellow member of ACCA and have acquired 25 years of experience in all aspects of accountancy which includes preparation of accounts, VAT, book-keeping, payroll, corporation tax and personal tax. I prepare management accounts for various clients using quickbooks, VT or sage line 50 on a monthly basis and identify key ratios for assessing business performance.