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Extending year end

Extending year end

Hi folks,

I'd like to double-check something in relation to a new client of our firm.

The company's first year-end is Feb 2016 and there are substantial profits, and an employer contribution is being considered to help reduce CT exposure. There are two directors with no income from the company as yet so this would be a useful mechanism for tax planning at this stage.

Anyway, my query is this and I'm asking to be sure before I advise them accordingly. If the directors want a little bit more time to consider the type of pension scheme and the amount of employer contribution, could we push the year end out to 31 March (so a 13-month accounting period) and still obtain the tax relief?

As far as I'm aware the 13-month period will simply be apportioned between two CT600 returns pro-rata so the pension contribution will form part of the apportioned profits.

I just want to be sure there isn't something else I am missing on this in terms of date of payment of the pension contribution?

Slightly nervous given it's a new client and I don't want to mess this up for them!

Many thanks folks for your help in advance.

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23rd Feb 2016 12:09

Accounting Reference Date Change

I agree with your thoughts to allow the client longer.

 

From experience I wouldn't load the ARD extension until the financial statements were complete as it is possible the client may want longer and if the 31/3 p/end is locked in that will be it (just one extension per five years).

 

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23rd Feb 2016 12:17

I would agree with the above

Accounts aren't due until the end of November so there's no rush to put the change in now. I don't see any issue with your proposal to extend the reference date but I would wait until the client is certain about what they want to do, you can extend it right up to August if need be.

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