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How to shorten your company period of account

Hi all,

When a company has been incorporated am I correct in saying that you shorten it's accounting period simply issuing a form AA01 to companies house as per the below link:

http://www.companieshouse.gov.uk/forms/generalForms/AA01_change_of_accounting_reference_date.pdf

For corporation tax purposes the only issue would be if you were trying to increase the period of account, but since I am not I simply state the period ending on the CT600 and HMRC will update its records to show the new accounting period as per this link:

http://www.hmrc.gov.uk/ct/ct-online/file-return/online.htm#6

Is this right or have I drastically missed something out here??

Thank you in advanced.

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So long as you time apportion any capital allowaces etc then I can't see a problem with this..... anyone else??

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Just the caveat

the first period must be at least six months long, any subsequent changes can shorten it as much as you like.

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6 months long?

I always thought an accounting period had to be 6 months long.  I think this must have been the case may moons ago but at some time it changed.  You can now file accounts for one month if you like.  I think the only restriction is that an AP can't exceed 18 months.  Obviously for CT it would be split 12m + excess if it exceeds 12 months.

Funnily enough I shortened an AP recently and the CT600 (filed via 3rd party software) got jammed in the electronic world somewhere until I rang HMRC and asked them to retrieve it.  The lady I spoke to was adamant that I should have notofied them beforehand to tell them the AP had changed, so very interested to read in their own guidance that this is not necessary!

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That was a common misconception ...

... it was always thus, you can never go beyond eighteen months, but other than the first period it can be any length up to that.

I have pasted below the relevant sections from CA1985 and CA1976. Sorry it's a bit long, but thought important to show full text.

This is CA1985 [ - 224(4) and 225(4a) and 225(5) the most relevant)

s224 - Accounting reference period and date

(1)A company's accounting reference periods are determined according to its accounting reference date.

 

(2)A company may give notice in the prescribed form to the registrar of companies specifying a date in the calendar year as being the date on which in each successive calendar year an accounting reference period of the company is to be treated as coming to an end; and the date specified in the notice is then the company's accounting reference date.

 

(3)However, no such notice has effect unless it is given before the end of 6 months beginning with the date of the company's incorporation ; and, failing such notice, the company's accounting reference date is 31st March.

 

(4)A company's first accounting reference period is such period ending with its accounting reference date as begins on the date of its incorporation and is a period of more than 6 months and not more than 18 months; and each successive period of 12 months beginning after the end of the first accounting reference period and ending with the accounting reference date is also an accounting reference period of the company.

(5)This section is subject to section 225, under which in certain circumstances a company may alter its accounting reference date and accounting reference periods.

225 - Alteration of accounting reference period

(1)At any time during a period which is an accounting reference period of a company by virtue of section 224 or 226 the company may give notice in the prescribed form to the registrar of companies specifying a date in the calendar year (" the new accounting reference date ") on which that accounting reference period (" the current accounting reference period ") and each subsequent accounting reference period of the company is to be treated as coming to an end or (as the case may require) as having come to an end.

 (2)At any time after the end of a period which was an accounting reference period of a company by virtue of section 224 or 226 the company may give notice in the prescribed form to the registrar of companies specifying a date in the calendar year (" the new accounting reference date") on which that accounting reference period (" the previous accounting reference period ") and each subsequent accounting reference period of the company is to be treated as coming or (as the case may require) as having come to an end.

 

(3)But a notice under subsection (2)—

 (a)has no effect unless the company is a subsidiary or holding company of another company and the new accounting reference date coincides with the accounting reference date of that other company, and

 (b)has no effect if the period allowed (under section 242) for laying and delivering accounts in relation to the previous accounting reference period has already expired at the time when the notice is given.

(4)A notice under this section shall state whether the current or previous accounting reference period of the company—

 (a)is to be treated as shortened, so as to come to an end or (as the case may require) be treated as having come to an end on the new accounting reference date on the first occasion on which that date falls or fell after the beginning of that accounting reference period, or

(b)is to be treated as extended, so as to come to an end or (as the case may require) be treated as having come to an end on the new accounting reference date on the second occasion on which that date falls or fell after the beginning of that accounting reference period.

 (5)A notice which states that the current or previous accounting reference period is to be extended has no effect if the current or previous accounting reference period, as extended in accordance with the notice, would exceed 18 months.

(6)Subject to any direction given by the Secretary of State under the next subsection, a notice which states that the current or previous accounting reference period is to be extended has no effect unless—

 (a)no earlier accounting reference period of the company has been extended by virtue of a previous notice given by the company under this section, or

(b)the notice is given not less than 5 years after the date on which any earlier accounting reference period of the company which was so extended came to an end, or

(c)the company is a subsidiary or holding company of another company and the new accounting reference date coincides with the accounting reference date of that other company.

 (7)The Secretary of State may, if he thinks fit, direct that subsection (6) shall not apply to a notice already given by a company under this section or (as the case may be) in relation to a notice which may be so given. 

And this is CA 1976 - [s2(1) and s3(4a) and s3(5) the most relevant

1 - Duty to prepare, lay and deliver accounts by reference to accounting reference periods

(1)The directors of every company shall in respect of each accounting reference period of the company prepare a profit and loss account for a period determined by reference to that accounting reference period in accordance with subsections (2) and (3) below; and the period in respect of which any such account prepared under this section is made up shall be a financial year of the company (whether it is a year or not).

(2)The period in respect of which a profit and loss account prepared under this section in respect of the first accounting reference period of a company is to be made up shall be a period beginning with the first day of the accounting reference period and ending with—

(a)the date on which the accounting reference period ends ;

or

(b)such other date, not being more than seven days before or more than seven days after the end of the accounting reference period, as the directors may determine.

(3)The period in respect of which a profit and loss account prepared under this section in respect of any accounting reference period of a company other than the first is to be made up shall be a period beginning with the day after the date to which the last preceding profit and loss account prepared under this section was made up and ending as mentioned in subsection (2) above.

(4)The directors of every company shall prepare a balance sheet as at the date to which any profit and loss account prepared under this section is made up.

(5)References hereafter in this section to documents required to be comprised in the accounts of a company in respect of any accounting reference period are references to the profit and loss account and balance sheet required under the preceding provisions of this section to be prepared in the case of that company in respect of that accounting reference period, and include references—

(a)to the report of the auditors required by section 156(1) of the Act of 1948 to be attached to that balance sheet; and

(b)to the report of the directors required by section 157(1) of that Act to be so attached.

(6)In respect of each accounting reference period of a company the directors of the company shall lay before the company in general meeting a copy of every document required to be comprised in the accounts of the company in respect of that period.

(7)Subject to subsection (8) below, in respect of each accounting reference period of a company the directors of the company—

(a)shall deliver to the registrar of companies a copy of every document required to be comprised in the accounts of the company in respect of that period ; and

(b)if any such document is in a language other than English, shall annex to the copy so delivered to the registrar a translation of it into English certified in the prescribed manner to be a correct translation.

(8)The directors of an unlimited company shall not be required under subsection (7) above to deliver to the registrar of companies copies of documents required to be comprised in the accounts of the company in respect of any accounting reference period if—

(a)at no time during that accounting reference period has the company been, to its knowledge, the subsidiary of a company that was then limited and at no such time, to its knowledge, have there been held or been exercisable, by or on behalf of two or more companies that were then limited, shares or powers which, if they had been held or been exercisable by one of them, would have made the company its subsidiary; and

(b)at no such time has the company been the holding company of a company which was then limited ; and

(c)at no such time has the company been carrying on business as the promoter of a trading stamp scheme within the meaning of the Trading Stamps Act 1964. References in this subsection to a company that was limited at a particular time shall be taken as referring to a body corporate (whether incorporated under the law in force in Great Britain or the law in force elsewhere) the liability of whose members was at that time limited.

(9)Sections 127 and 148 of the Act of 1948 (which are superseded by this section) shall cease to have effect; and in section 455(1) of that Act, for the definition of "financial year " there shall be substituted— “financial year "—

(a)in relation to any body corporate to which section 1 of the Companies Act 1976 applies, means any period in respect of which any profit and loss account prepared under that section as it applies to that body corporate is made up; and

(b)in relation to any other body corporate, means any period in respect of which any profit and loss account of the body corporate laid before it in general meeting is made up ;

whether, in either case, that period is a year or not.'.

(10)In section 9(3) of the European Communities Act 1972, for paragraph (d) (official notification of receipt by registrar of annual return of company) there shall be substituted—”

“(d)any documents delivered by a company in pursuance of section 1(7) of the Companies Act 1976”.

(11)For the purposes of this Part of this Act any reference to a profit and loss account shall be taken, in the case of a company not trading for profit, as referring to an income and expenditure account.

2 - Accounting reference period of a company

(1)Any company may give notice in the prescribed form to the registrar of companies specifying a date in the calendar year as being the date on which in each successive calendar year an accounting reference period of the company is to be treated as coming to an end; but no such notice shall have effect unless it is given before the date on which section 1 above comes into operation or before the end of the period of six months beginning with the date of the incorporation of the company, whichever last occurs.

 (2)Subject to section 3 and subsection (3) below—

 (a)in the case of a company which has given notice in accordance with subsection (1) above, the date specified in that notice ; and

 (b)in any other case, 31st March;

shall be the company's accounting reference date.

 (3)In the case of a company which has not given notice in accordance with subsection (1) above, the registrar of companies may during the period of two years beginning with the date on which section 1 above comes into operation determine, with the consent of the company, that some date other than 31st March shall be the date on which in each successive calendar year an accounting reference period of the company is to be treated as coming to an end; and, subject to section 3 below, the date so determined shall be and, in relation to any occurrence of that date before it was so determined, shall be treated as having been the company's accounting reference date instead of 31st March.

 (4)Subject to section 3 below, the first accounting reference period of a company shall be such period ending with the company's accounting reference date as—

 

(a)begins or began on the day after the date to which the profit and loss account of the company last laid before the company in general meeting before the coming into operation of section 1 above (whether laid in the year immediately before the coming into operation of that section or earlier) is or was made up; or

 

(b)if no profit and loss account of the company is or was so laid before the coming into operation of that section, begins or began on the date of the incorporation of the company, whether that date is or was a date after or a date before the coming into operation of that section;

and (in either case) is or was a period exceeding six months and not exceeding eighteen months.

 (5)Subject to section 3 below, in the case of any company each successive period of twelve months beginning after the end of the company's first accounting reference period and ending with the company's accounting reference date shall also be an accounting reference period of the company.

 (6)The requirements of section 1 above apply in relation to every period which is or was an accounting reference period of a company by virtue of this section or section 3 below, whether or not that period falls wholly or partly after the date on which section 1 above comes into operation. 

3 - Alteration of accounting reference period

(1)At any time during the course of a period which is an accounting reference period of a company by virtue of section 2 above or this section the company may give notice in the prescribed form to the registrar of companies specifying a date in the calendar year (" the new accounting reference date ") on which that accounting reference period (" the current accounting reference period") and each subsequent accounting reference period of the company is to be treated as coming or (as the case may require) as having come to an end.

(2)Subject to subsection (3) below, at any time after the end of a period which was an accounting reference period of a company by virtue of section 2 above or this section the company may give notice in the prescribed form to the registrar of companies specifying a date in the calendar year (" the new accounting reference date ") on which that accounting reference period (" the previous accounting reference period") and each subsequent accounting reference period of the company is to be treated as coming or (as the case may require) as having come to an end.

(3)A notice under subsection (2) above—

 (a)shall not have effect unless the company is a subsidiary or holding company of another company and the new accounting reference date coincides with the accounting reference date of that other company; and

 

(b)shall not have effect if the period allowed for laying and delivering accounts in relation to the previous accounting reference period has already expired at the time when the notice is given.

 (4)A notice under this section shall state whether the current or previous accounting reference period of the company—

 (a)is to be treated as shortened, so as to come to an end, or (as the case may require) to be treated as having come to an end, on the new accounting reference date on the first occasion on which that date falls or fell after the beginning of that accounting reference period; or

 (b)is to be treated as extended, so as to come to an end, or (as the case may require) to be treated as having come to an end, on the new accounting reference date on the second occasion on which that date falls or fell after the beginning of that accounting reference period.

 (5)A notice under this section which states that the current or previous accounting reference period of the company is to be extended shall not have effect if the current or previous accounting reference period as extended in accordance with the notice would exceed eighteen months.

 (6)Subject to any direction given under subsection (7) below, a notice under this section which states that the current or previous accounting reference period of the company is to be extended shall not have effect unless—

 (a)no earlier accounting reference period of the company has been extended by virtue of a previous notice given by the company under this section; or

 (b)the notice is given not less than five years after the date on which any earlier accounting reference period of the company which was so extended came to an end; or

 (c)the company is a subsidiary or holding company of another company and the new accounting reference date coincides with the accounting reference date of that other company.

(7)The Secretary of State may, if he thinks fit, direct that subsection (6) above shall not apply in relation to any notice already given by a company under this section or (as the case may be) in relation to any notice which may be so given.

 (8)Where a company has given notice which has effect in accordance with the preceding provisions of this section, and that notice has not been superseded by a subsequent notice given by the company which has effect in accordance with those provisions, the new accounting reference date specified in the notice shall be the company's accounting reference date, in substitution for the date which, by virtue of section 2 above or this section, was the company's accounting reference date at the time when the notice was given.

 (9)Where by virtue of a notice under this section one date is substituted for another as the accounting reference date of a company—

 (a)the current or previous accounting reference period of the company, shortened or extended (as the case may be) in accordance with the notice as mentioned in subsection (4) above ; and

 (b)each successive period of twelve months beginning after the end of that accounting reference period, as so shortened or extended, and ending with the new accounting reference date;

shall be or (as the case may require) shall be treated as having been an accounting reference period of the company, instead of any period which would be an accounting reference period of the company if the notice had not been given.

 (10)Nothing in this section shall affect any accounting reference period of the company which—

 (a)in the case of a notice under subsection (1) above, is earlier than the current accounting reference period, or

 (b)in the case of a notice under subsection (2) above is earlier than the previous accounting reference period. 

  

 

 

 

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1st period can be shorter than 6 months

If you speak to Companies House they will tell you that the 1st period can be as short as 1 day. See also the guidance on Companies House website (see point 5 of chapter 2 of the attached):

http://www.companies-house.gov.uk/about/gbhtml/gp2.shtml#ch2

 

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Interesting

See this old thread

http://www.accountingweb.co.uk/anyanswers/flaw-companies-act

seems some confusion!

This is CA2006 s391 (sub (5) refers) and s392 which seems contradictory!

391 - Accounting reference periods and accounting reference date E+W+S+N.I.

This section has no associated Explanatory Notes

 

(1)A company's accounting reference periods are determined according to its accounting reference date in each calendar year.

(2)The accounting reference date of a company incorporated in Great Britain before 1st April 1996 is—

(a)the date specified by notice to the registrar in accordance with section 224(2) of the Companies Act 1985 (c. 6) (notice specifying accounting reference date given within nine months of incorporation), or

(b)failing such notice—

(i)in the case of a company incorporated before 1st April 1990, 31st March, and

(ii)in the case of a company incorporated on or after 1st April 1990, the last day of the month in which the anniversary of its incorporation falls.

(3)The accounting reference date of a company incorporated in Northern Ireland before 22nd August 1997 is—

(a)the date specified by notice to the registrar in accordance with article 232(2) of the Companies (Northern Ireland) Order 1986 (S.I. 1986/1032 (N.I. 6)) (notice specifying accounting reference date given within nine months of incorporation), or

(b)failing such notice—

(i)in the case of a company incorporated before the coming into operation of Article 5 of the Companies (Northern Ireland) Order 1990 (S.I. 1990/593 (N.I. 5)), 31st March, and

(ii)in the case of a company incorporated after the coming into operation of that Article, the last day of the month in which the anniversary of its incorporation falls.

(4)The accounting reference date of a company incorporated—

(a)in Great Britain on or after 1st April 1996 and before the commencement of this Act,

(b)in Northern Ireland on or after 22nd August 1997 and before the commencement of this Act, or

(c)after the commencement of this Act,

is the last day of the month in which the anniversary of its incorporation falls.

(5)A company's first accounting reference period is the period of more than six months, but not more than 18 months, beginning with the date of its incorporation and ending with its accounting reference date.

(6)Its subsequent accounting reference periods are successive periods of twelve months beginning immediately after the end of the previous accounting reference period and ending with its accounting reference date.

(7)This section has effect subject to the provisions of section 392 (alteration of accounting reference date). 

 

392 - Alteration of accounting reference dateE+W+S+N.I.This section has no associated Explanatory Notes

 

(1)A company may by notice given to the registrar specify a new accounting reference date having effect in relation to—

 

(a)the company's current accounting reference period and subsequent periods, or

 

(b)the company's previous accounting reference period and subsequent periods.

A company's “previous accounting reference period” means the one immediately preceding its current accounting reference period.

 

(2)The notice must state whether the current or previous accounting reference period—

 

(a)is to be shortened, so as to come to an end on the first occasion on which the new accounting reference date falls or fell after the beginning of the period, or

 

(b)is to be extended, so as to come to an end on the second occasion on which that date falls or fell after the beginning of the period.

 

(3)A notice extending a company's current or previous accounting reference period is not effective if given less than five years after the end of an earlier accounting reference period of the company that was extended under this section.

This does not apply—

 

(a)to a notice given by a company that is a subsidiary undertaking or parent undertaking of another EEA undertaking if the new accounting reference date coincides with that of the other EEA undertaking or, where that undertaking is not a company, with the last day of its financial year, or

 

(b)where the company is in administration under Part 2 of the Insolvency Act 1986 (c. 45) or Part 3 of the Insolvency (Northern Ireland) Order 1989 (S.I. 1989/2405 (N.I. 19)), or

 

(c)where the Secretary of State directs that it should not apply, which he may do with respect to a notice that has been given or that may be given.

 

(4)A notice under this section may not be given in respect of a previous accounting reference period if the period for filing accounts and reports for the financial year determined by reference to that accounting reference period has already expired.

 

(5)An accounting reference period may not be extended so as to exceed 18 months and a notice under this section is ineffective if the current or previous accounting reference period as extended in accordance with the notice would exceed that limit.

This does not apply where the company is in administration under Part 2 of the Insolvency Act 1986 (c. 45) or Part 3 of the Insolvency (Northern Ireland) Order 1989 (S.I. 1989/2405 (N.I. 19)).

 

(6)In this section “EEA undertaking” means an undertaking established under the law of any part of the United Kingdom or the law of any other EEA State. 

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