Changing your company’s year end

Source: HM Revenue & Customs | | 21/09/2017

There are special rules which limit the ability to change a company’s year end date. A company’s year end date is also known as its ‘accounting reference date’ and is historically set by reference to the date the company was incorporated. Under certain circumstances it is possible to make a change to the year end.

As a general rule, you can only change the year end for the current financial year or the one immediately before. Making a change to a year end date will also change the deadline for filing accounts (except during a new company’s first financial year). For new companies, the first accounting reference date is fixed as the last day in the month in which its first anniversary falls.

There is no limit to the amount of times you can shorten a year end date but you can only extend the period to a maximum of 18 months once in every five years. The financial year can be extended more often under limited circumstances, for example, when the company has been placed in administration.

A request for a change to an accounting reference date can be made online using the Companies House online service or by using a postal version of the change your company accounting reference date (AA01) form. No change can be made to a period for which accounts are overdue.

There is no overriding reason for using one date over another but there are a number of factors to take into account. The most common year end dates are usually 31 December (the end of the year) or 31 March (to coincide with the end of the tax year).

Planning note:

Changing an accounting date can be useful if your present year end date falls at a busy part of your trading year, or if you have a profitable period followed by an unexpected loss making period. In the later case, extending an accounting period can average down profits over the extended period and bring forward a reduction in tax payable.

We would be happy to review your year end date to see if a change would be of benefit.



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