Company accounting periods

Companies House say :
Following Euan's post, I phoned Companies House because my understanding was that any accounting period, including the first could be shortened to less than six months.

My concern was that I have a client with a company we formed in January 2008 and we have shortened the ARD to 31 Mar 2008.

I spoke to CoHo and they said this was OK. I asked them about first period rules and they basically said "computer says yes". So, if you change the ARD online and their computer system accepts it then you win.

I don't imagine there'll be a problem with HMRC because their normal stance on these issues (in my experience) is that if it's OK with CoHo then it's OK with us.

Companies House is right
... and I was wrong. In the last quote in my original answer, I combined the last two sub-sections. In fact, the last sub-section:

"... subject to the provisions of [the next] section relating to the alteration of accounting reference dates and the consequences of such alteration."

stands alone and therefore applies to all the other sub-sections including the one about the first accounting period. So, yes, having set a first accounting period of between 6 and 18 months, you can then shorten it down to just 1 day and this must always have been the case.

However, why would you want to put the client to the expense of two sets of annual accounts instead of one?

Many Years Ago
when the three year carry back for trading losses came in I needed to have an accounting period ending after 31 March 199(whenever it was). We achieved that by shortening the AP down to one day. As I recall, we needed to shorten within the existing period so that paperwork could not be done after the end of the period. We ended up with a one day accouting period of 1 April. When the accounts went to the Inspector he made a comment about this being a day associated with practical jokes. Inspectors do have a human side (or did then). The three year loss carry back is only available on cessation these days.

No change
s.224(4) CA 1985 and s.392(5) CA 2006, which replaced it from 6th April 2008, both say exactly the same thing:

"A company's first accounting reference period is the period of more than 6 months, but not more than 18 months, beginning with the date of incorporation and ending with its accounting reference date."

s.224(5&6) CA 1985 and s.392(6&7) CA 2006 both say:

"Its subsequent accounting reference periods are successive periods of twelve months ... subject to the provisions of [the next] section relating to the alteration of accounting reference dates and the consequences of such alteration."

s.225(6) CA 1985 and s.392(5) CA 2006 both say:

"A company's accounting reference period may not ... be extended so as to exceed 18 months ..."

So, the full answer is (and always has been) that the first accounting period must be between 6 and 18 months and that subsequent periods will usually be 12 months, but can be anything from 1 day to 18 months.

How strange
Hi TH

I was always under the impression that an accounting period could not be less than 6 months as well.

However upon reading your post I have looked at the companies house web site and it appears that there is no minimum.

Check out chapter 1 para 5 here http://www.companieshouse.gov.uk/about/gbhtml/gba3.shtml

I am not sure if or when the rules were changed but a call to Companies house enquiry centre should sort things out for you. 0870 33 33 636

Not sure if this is totally helpful but it is nice to know that you are not alone in your beliefs!!!!

one day
you can prepare and file accounts for a period of one day, if you so wish.