There are many reasons why you might want to change a limited company year end and it is possible to do so whether:
- the trade is seasonal and you do not want year end in your busiest period
- to tie in to the tax year (although we would not necessarily recommend this)
- to allow for a full year activity rather than being tied to the date of incorporation
The usual rule for a new company is that the year end is the month end date of the anniversary of the date of incorporation.
Case study 1
A client of ours was incorporated on 13 April 2012 so the year end date would normally be 30 April 2013 and annually thereafter. However they were buying another business and did not manage to complete the purchase until August so we decided to extend the year end to 31 August so the first year’s accounts included 12 months activity. While this delays the deadline for paying and submitting corporation tax to 1 June 2014 and 31 August 2014, accounts must still be filed within 21 months of incorporation, ie 10 January 2014.
Case study 2
This was a similar situation in that a startup company did not start trading for several months from incorporation on 5 December 2011, so a the year end was shortened from the expected 31 December 2012 to 31 May 2012 and a dormant set of accounts prepared to that date. This does at least mean that all of the deadlines are extended by the same amount unlike the situation above.
Case study 3
No clients fall into this option but it is possible to extend the year end to make the first accounts period up to 18 months long, but that does only leave 3 months to file the accoounts at Companies House which may be cutting it fine!
While these all refer to new companies the same principles apply to existing companies, the only proviso being that you cannot extend a year end more than once in 5 years and cannot change a year end when accounts are already overdue (subject to special rules). The principles are similar for LLPs.
This only covers some of the basics so you should seek professional advice before taking any steps based on the information shown. If you would like advice in this or other areas feel free to call. Alastair Wood, AW Accounting, Gravesend, Kent – Accountants who “speak your language”