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New company accounting peroid?

New company accounting peroid enquiry

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Good evening,

I setup a small limited company back on the 19th december 2020, I told my accountant that my anticipated date to start trading on the 15th January 2021, so she said she has informed HMRC of that. But unfortunately, I had to travel abroad to see a terminally ill member of the family and didn't come back until late february, so I actually started trading on 26th March.

So the annual accounts are from 19th december 2020 to 31st december 2021, for company house, with profits and loss accounts from 26th march to 31st december.

My accountant says that even though I started on 26th March, the CT600 dates are gonna be from 19th december 2020 to 19th december 2021 then another one from 19th december 2021 to 31st december 2021. Does it matter? Or do you have to file from 19th december 2020 to 26th March for saying I was dormant then one from 26th march to 31st December?

Kind regards

Thom

Replies (11)

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By David Ex
10th May 2022 23:03

I’d suggest you follow the advice of the accountant you are paying and discuss any questions you have with them. Presumably you trusted them enough when you appointed them.

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Replying to David Ex:
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By Alexerg
10th May 2022 23:33

...

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Replying to David Ex:
paddle steamer
By DJKL
11th May 2022 09:53

Trust is a strong word.

Perhaps willing to listen to their advice is more appropriate.

I know from my experience instructing other professionals (architects, surveyors, solicitors, planners) that trust is something that only develops over time, when say one project has concluded or a year or two has passed without issues. I would certainly not "trust" on day one until the mettle has been tested.

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By Leywood
11th May 2022 07:31

Going to. Not gonna.

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ALISK
By atleastisoundknowledgable...
11th May 2022 09:35

If you were my client, I’d be doing the same as your accountant

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Replying to atleastisoundknowledgable...:
By Paul D Utherone
11th May 2022 09:56

Would you not split the long accounts as:

19/12/20-25/3/21 Not Trading; and
26/3-31/12/21 Trading

And possibly write to HMRC to advise that the anticipated commencement of trade originally advised on 15/1/21 was affected by circumstances and did not ultimately occur until 26/3/21

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Replying to Paul D Utherone:
RLI
By lionofludesch
11th May 2022 10:06

Paul D Utherone wrote:

Would you not split the long accounts as:

19/12/20-25/3/21 Not Trading; and
26/3-31/12/21 Trading

And possibly write to HMRC to advise that the anticipated commencement of trade originally advised on 15/1/21 was affected by circumstances and did not ultimately occur until 26/3/21

I agree with Paul. The accountant is wrong. Commencement of trade starts a new accounting period. Technically, you need to submit a nil return for the non trading period but HMRC can be persuaded to withdraw it. Not that I'd make a big fuss about a nil return.

Doesit matter? Probably not, but it's impossible to say without the numbers.

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By stephenkendrew
11th May 2022 10:08

Your accountant is wrong.

An accounting period for corporation tax purposes begins when a company starts to trade.

The period of the accounts is from 19 December 2020 to 31 December 2021 (unless you change the year-end date).

There are two accounting periods for corporation tax purposes-
From 19 December 2020 to 25 March 2021; and
From 26 March 2021 to 31 December 2021.

There should be no need to complete a corporation tax return for the first period, although you will need to inform HMRC of the fact otherwise they will expect one and charge a penalty if they do not receive it.

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Replying to stephenkendrew:
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By thommurray
11th May 2022 10:50

As far as I’m aware the, tax liability doesn’t change as the overall profit remains the same, and the returns that my accountant has sent off, has covered 19th December 2020 to 19th December 2021. Then second one covers 19th December 2021 to 31st December 2021.

So he has kinda addressed the dormant period, but it’s just incorporated into the same period as trading, is this going to be an issue? He did clarify that the company started trading 26th March in the statutory accounts.

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Replying to thommurray:
RLI
By lionofludesch
11th May 2022 11:11

thommurray wrote:

As far as I’m aware the, tax liability doesn’t change as the overall profit remains the same, and the returns that my accountant has sent off, has covered 19th December 2020 to 19th December 2021. Then second one covers 19th December 2021 to 31st December 2021.

So he has kinda addressed the dormant period, but it’s just incorporated into the same period as trading, is this going to be an issue? He did clarify that the company started trading 26th March in the statutory accounts.

Might affect a future loss relief claim if you claim to carry back. I dunno - this forum has a tradition of defending accountants but sometimes you have to admit that they're wrong.

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Replying to lionofludesch:
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By thommurray
11th May 2022 11:53

I don’t think there will be a loss relief claim any time soon. Thankfully

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