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
Related resources
Replies (16)
Please login or register to join the discussion.
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
And if the company was inactive in 2020, there's nothing to report or consolidate in the parentco accounts for that year.
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.
@ 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.
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.
@ 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.
Oh 'perspicacious' - that's a new word for me - sounds good too, a bit like supercalifragilisticexpialidocious!
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.
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.
Because I am (currently) not making the change - I am advising them of the change to make.
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