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Shorten a day

Shorten a day is getting heavily abused

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Not a question, more an observation (though thoughts are always welcome). A tale to tell.

Six or seven years ago, when I joined this site, I learned a lot in a short space of time. Shorten the year end by one day to buy you three more months was one of them. Fast forward a year or so, and another manager in my firm said 'Deadline's Friday. They're not going to make it.' I suggested 'shorten a day' and told them what I'd learned from this site.

Hissing noises were made, sharp intakes of breath around the office, cries of 'It's not right' and 'that's abuse' abounded. Some even said it wouldn't work.
Form AA01 was loaded and 'just to see' the manager dutifully filled it in, shortening by one day.
A check later at Companies House Direct (back then) to see the change in filing deadline and everyone is amazed. A comment of 'Well, we'll never do that again. We've got some integrity!' was made by the manager.

Fast forward five more years and its all the rage in our office. Shorten a day. Shorten again! Get 15 months to file. Hell, we've even for one medium sized client, EXTENDED from December 17 to June 18. Then at the end of March 2019 reshortened back to December 2017 to get to the end of June 2019 to file! The accounts went in last week for December 2017 and aren't late! I've even now got a client whose last filed accounts are December 2016. They're not late. The current deadline for the 18 months period to June 2018 is presently 29th September 2019.

So what are people's thoughts on this process? And has the system abuse significantly increased now Companies House Beta shows the impact of this straight away for all the world to see?
Finally, do you think Companies House will eventually petition the government to stop this abuse?

Replies (31)

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Lone Wolf
By Lone_Wolf
02nd Jul 2019 14:05

If thems the rules they set then thems the rules we play by says I.

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By GW
02nd Jul 2019 14:09

thevaliant wrote:

Finally, do you think Companies House will eventually petition the government to stop this abuse?

It is included as Question 21 of the Corporate Transparency and Register Reform consultation that ends next month, so they are looking to restrict rather than stop the practice

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Replying to GW:
Flag of the Soviet Union
By thevaliant
02nd Jul 2019 14:25

Interesting, and good to know. I had a read.

How it would work, I don't know. Only allowed to shorten once every X years?

I could see those who are serial abusers might resort to abusing the group extension/shorten concession which is illegal, but isn't checked by Companies House.

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Replying to thevaliant:
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By DonDan
02nd Jul 2019 14:31

Or allow them to shorten if they want but without any extension in the filing deadline.

Was there any particular reason the extension provision is there?

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Replying to DonDan:
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By GW
02nd Jul 2019 15:27

Presumably the extension provision is to prevent the filing deadline for the shortened accounts being before the date the change is made

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Replying to GW:
RLI
By lionofludesch
03rd Jul 2019 09:43

That could be sorted by making it the later of three months after the year end or 21 months after the start of the period.

I don't use it often but I'd be sad to see it go.

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My photo
By Matrix
02nd Jul 2019 14:19

It depends what the underlying reasons are for submittng the accounts late. I don’t know if I would want clients for whom 9 months is not long enough to get organised.

I have just prepared my first set of 30 June 2019 accounts so feeling rather smug!

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Red Leader
By Red Leader
02nd Jul 2019 22:23

Doesn't happen on my watch. Slippery slope.

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Jennifer Adams
By Jennifer Adams
03rd Jul 2019 13:25

Here's an article written on this very subject only last month titled:

Consultation proposes sweeping new powers for Companies House

https://www.accountingweb.co.uk/business/finance-strategy/consultation-p...

and I quote...

Shortening an accounting period

The use of the workaround of shortening an accounting period and thereby increasing the filing date by up to three months is a practice known to the majority of accountants. Companies House does not mind this, but what is does mind is the multiple use of the practice, which will now be restricted.

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By justsotax
03rd Jul 2019 14:26

I am all for having principles....except when it comes to government bodies! And what is the loss of revenue to the exchequer by such abuse....or should I put it another way....if it was significant they would have made a move already....

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Replying to justsotax:
RLI
By lionofludesch
03rd Jul 2019 16:15

justsotax wrote:

I am all for having principles....except when it comes to government bodies!

Quite. They're clearly willing to perjure themselves before Parliamentary committees. They've lost the moral high ground.

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By andrew55
04th Jul 2019 13:26

We started doing this a lot. I have now stopped the practice except for genuine reasons. Clients not bothering until the last minute does not count and will now have to fork out £150 as far as I'm concerned!

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Replying to andrew55:
RLI
By lionofludesch
04th Jul 2019 13:49

You don't think you have an obligation to get the best deal for your client ?

Whether they deserve it or not ?

If you don't want to act for them that's one thing. But while you are acting, your obligation is to get the best outcome. It's within the rules.

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By Justin Bryant
04th Jul 2019 13:43

How on earth can something allowed by CA 2006 legislation be considered abusive or otherwise wrongful conduct?

This is a bit like how (pre GAAR) judges went out of their way to say tax planning that takes advantage of legitimate legislative choices cannot be described as tax avoidance or otherwise criticised. See Angel Court CoA decision re that point. (There is of course no GAAR re CA 2006.)

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Replying to Justin Bryant:
Psycho
By Wilson Philips
06th Jul 2019 18:39

I don’t think it’s remotely like taking one course of action over another. And just because something is legal doesn’t mean that it cannot be abusive.

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Replying to Wilson Philips:
RLI
By lionofludesch
06th Jul 2019 22:14

Abusive in what way ?

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Replying to lionofludesch:
Psycho
By Wilson Philips
06th Jul 2019 22:50

In the sense that using a provision for an unintended consequence (avoidance of a penalty) which has (presumably) nothing to do with the original intention of the draftsmanship is an abuse of the provision. (For the avoidance of doubt, I abuse it - on behalf of clients - all the time. )

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Replying to Wilson Philips:
RLI
By lionofludesch
07th Jul 2019 17:54

It can't be a strongly held view if you abuse it yourself.

How do you justify using it ? Ethically, I mean.

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Replying to lionofludesch:
Psycho
By Wilson Philips
07th Jul 2019 19:10

It’s a strongly held view. I just don’t consider it to be serious abuse, but it’s abuse nevertheless.

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By djn24
05th Jul 2019 10:29

I use it occasionally but only when there is a good reason. 9 months to file accounts is long enough.

I think if clients knew we could do this they would be late every single year as they would expect this to be done.

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By mickeyparish
05th Jul 2019 11:58

To my mind it's abuse and should be limited by obliging companies to justify the request. We have a current case of a company we deal with owing money to lots of people ( inlcuding us ! ) and who keep postponing their accounts reporting date. What is more, the Credit checkers, such as Experian, do not seem to notice the abuse. It stinks.

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Replying to mickeyparish:
RLI
By lionofludesch
05th Jul 2019 12:10

mickeyparish wrote:

To my mind it's abuse and should be limited by obliging companies to justify the request.

Who's going to deal with that ? The Government are unlikely to be setting more staff on at Companies House just to hear delay requests.

I take it you've made your case to Companies House. They're currently inviting views on how the registry is run.

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Replying to lionofludesch:
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By mickeyparish
05th Jul 2019 14:23

Probably more mileage in making the case to the credit checking agencies - they can probably set up an algorithm to spot the offenders. As with most people busy running their own businesses I have time to moan but no time to lobby !

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Replying to mickeyparish:
RLI
By lionofludesch
05th Jul 2019 14:44

You can't really complain then.

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By Myshkin
06th Jul 2019 15:09

What a lot of effort for nothing. If a client is late getting his books in tough luck

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Replying to Myshkin:
RLI
By lionofludesch
06th Jul 2019 15:12

You think it's just luck ?

It's not a lot of effort. Five minute job, if that.

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ALISK
By atleastisoundknowledgable...
06th Jul 2019 16:17

I find that we’re doing it more than we used to, a mixture of not wanting to miss deadlines and - more commonly - waiting until we can file next year’s accounts at the same time, so that a poor set of accounts don’t create such a bit credit rating hit.

Another way of doing that, is that I’ve just extended an accounting period to 18 months, then immediate shortened the next to 6 months. Apparently the client thought the 1 day trick was ‘a bit dodgy’!

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Jennifer Adams
By Jennifer Adams
07th Jul 2019 17:42

As I commented above...
"Companies House does not mind this, but what is does mind is the multiple use of the practice, which will now be restricted"

Companies House intends to not accept accounts from companies that use this method of late submission more than a set number of times/regularly. However... that is all the consultation paper says so the practice is bound to continue but just not for those clients who use this 'loophole' regularly.

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Replying to Jennifer Adams:
Psycho
By Wilson Philips
07th Jul 2019 17:58

So how is that going to work? That implies that CH. will accept the change of ARD in any event but then refuse to accept accounts where the provision has been abused. So how does one then get the accounts accepted?

The solution suggested earlier seems far more sensible - make the filing date the later of 9 months from ARD and 21 months from beginning of period of account.

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Replying to Wilson Philips:
RLI
By lionofludesch
07th Jul 2019 18:04

Wilson Philips wrote:

The solution suggested earlier seems far more sensible - make the filing date the later of 9 months from ARD and 21 months from beginning of period of account.

Yes, that was me. I'm obviously smarter than the Government. Not surprising, really.

Not accepting accounts can't be right, can it ? That would mean you can never file accounts once you're late, which is even worse than what we have now.

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Replying to Wilson Philips:
ALISK
By atleastisoundknowledgable...
09th Jul 2019 12:21

Surely the best solution is for the frequency of shortening the ARD is restricted, in much the same manner as lengthening is.

I’ve never understood why one is and one isn’t.

For the record, it’s legally possible and I do it a hell of a lot.

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