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Can I shorten the first accounting period

Can I shorten the first accounting period to 2 months

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A newly incorporated client has an incorporation date of  7th Oct 2020 giving a ARD of 31 Oct 2021. They currently have no business activities but will have within the next 2 months.

They are a subsidiary of an American parent company with a 31 Dec year end.

They would like to have the same year end as the parent company.

I could extend the first accounting period to 31 Dec 2021 but if possible I would prefer to shorten it to 31 Dec 2020 meaning a 2 month accounting period. As the company is dormant the additional work re stat accounts and CT would be minimal I think.

I have read (ie googled) this and at first glance the first accounting period seems to be required to be a minimum of 6 months however I have come across a couple of sources saying that although s391 CA states that the first accounting period must be between 6 & 18 months this is subject to s392 CA which allows the shortening of accounting periods .

My question is therefore has anyone successfully changed the first accounting period to less than 6 months

Thanks for your time

Replies (16)

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By sarahg
26th Mar 2021 07:58

You can't have a 2 month first period, minimum is 6 months, so you will need to extend and do a 14 month period

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Replying to sarahg:
Psycho
By Wilson Philips
26th Mar 2021 09:17

sarahg wrote:

You can't have a 2 month first period, minimum is 6 months,


Where did you read that?
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By paul.benny
26th Mar 2021 08:34

And if the company was inactive in 2020, there's nothing to report or consolidate in the parentco accounts for that year.

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By Duggimon
26th Mar 2021 10:09

Seems like it would have been quicker to try shortening it than to type all that.

Pretty sure you can shorten it as much as you like, the AA01 form doesn't specify a minimum.

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By fawltybasil2575
26th Mar 2021 10:12

@ karon (OP).

Here is a link to the relevant legislation:-

https://www.legislation.gov.uk/ukpga/2006/46/section/391

S.391 and S.392 are in point.

Whilst S.391(5) PRIMA FACIE prevents the opening period being less than 6 months, S.391(7) specifically states that S.391 is (in its entirety) SUBJECT TO S.392. Therein lies the key, AND if you look at S.392(1) and S.392(2), you will see that those subsections enable the opening period to be effectively any length.

Basil.

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Replying to fawltybasil2575:
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By karon
26th Mar 2021 10:43

Thanks Basil - this is my understanding also but there seem to be a number of accountants adamant that the first accounting period must be a minimum of 6 months.

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Replying to karon:
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By I'msorryIhaven'taclue
26th Mar 2021 12:50

But not on this thread!

Do tell us where, Karon.

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Replying to I'msorryIhaven'taclue:
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By karon
26th Mar 2021 13:06

Sarahg?

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Replying to karon:
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By I'msorryIhaven'taclue
26th Mar 2021 16:23

Doh! However did I miss that?

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Replying to karon:
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By Paul Crowley
26th Mar 2021 21:54

Brilliant

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By fawltybasil2575
26th Mar 2021 11:44

@ karon (OP)

Re your post at 10.43, I have no doubt that all the “adamant” accountants are far more intelligent, more knowledgeable, more perspicacious, more astute, more handsome/attractive, funnier, much younger and more wealthy than Basil.

However, on this very ISOLATED occasion, I feel that perhaps this is the “exception which proves the rule”, and that Basil may perhaps just conceivably be correct:)

Basil.

Thanks (7)
Replying to fawltybasil2575:
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By Southwestbeancounter
26th Mar 2021 15:00

Oh 'perspicacious' - that's a new word for me - sounds good too, a bit like supercalifragilisticexpialidocious!

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By stephenkendrew
26th Mar 2021 12:35

Basil is, of course, correct.

I changed the year end for one client only last week. The company was formed on 12 June 2019. We changed the year end to 31 October 2019 and submitted (dormant) accounts for that period. The next accounts required at Companies House are for the year ended 31 October 2020.

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By Wanderer
26th Mar 2021 16:29

Why not just try it online?
You will get an instant acceptance or rejection.
If it goes through then the discussion around what people think doesn't really matter.

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Replying to Wanderer:
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By karon
26th Mar 2021 16:36

Because I am (currently) not making the change - I am advising them of the change to make.

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By Paul Crowley
26th Mar 2021 22:01

Ignoring the comments to date: is there not an expectation that subsidiaries can change dates at will to converge with holding company accounting dates.

Confident that I have in the past shortened dates to less than 6 months with no issue
Usually to just clear a dormant period and get a good date for the trading accounts

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