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Changing a company's accounting year end date

Changing a company’s accounting year end

14 March 2024

UK companies can change their year end date under certain conditions, which can offer financial benefits. Changes impact filing deadlines and can be made online. Common year end dates are 31 December and 31 March. Overdue accounts cannot change periods.

Special rules limit the ability to change your company’s year end date. This date, also known as the ‘accounting reference date’, is usually set by the company’s incorporation date. However, under certain conditions, you can change the accounting year end. This flexibility can offer significant benefits for some businesses, especially those with unique financial cycles or those undergoing restructuring.

Generally, you can only change the year end for the current financial year or the one immediately before it. Changing the year end also changes the deadline for filing accounts. This doesn’t apply during a new company’s first financial year. This rule ensures that businesses maintain a consistent reporting period, making it easier for stakeholders to compare financial performance across years.

You can shorten a year end date any number of times. This flexibility can be particularly useful for businesses that need to align their financial year with that of a parent company or to adapt to changing business conditions. However, you can only extend it to a maximum of 18 months once every five years. You can extend it more often in limited circumstances, such as when the company enters administration. This restriction prevents businesses from manipulating their reporting period to gain undue financial advantages.

You can request a change to an accounting reference date online or by post. The online method, using the Companies House online service, is the preferred and quickest option. However, you can’t change a period for which accounts are overdue. This rule ensures that businesses fulfill their reporting obligations in a timely manner.

There’s no overriding reason to choose one date over another. But there are several factors to consider. The most common year end dates are 31 December or 31 March. These dates coincide with the end of the calendar year and the tax year, respectively, making it easier for businesses to align their accounting practices with these widely recognized periods.

In conclusion, while changing a company’s year end date involves navigating through certain rules and restrictions, it can provide businesses with the flexibility they need to manage their financial affairs effectively. As always, businesses should carefully consider their unique circumstances and consult with a financial advisor before making such decisions.

Source: Companies House Tue, 12 Mar 2024 00:00:00 +0100

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