When is a month not a month?

When is a month not a month?

Didn't find your answer?

A client company which was preparing its accounts up to 30th June decided for sound commercial reasons it wished instead to prepare accounts up to 31st December. I advised them to fill in the 'Change of Accounting Refernce Date' form and send it to the Companies Registry, extending the current accounting period from 30th June 2008 (1/7/07 to 30/6/08) to 31st December 2008 (1/7/07 to 31/12/08). I believed (and still do believe) this made the propsed new period of account 18 months long. However, the Companies Registry are vehement that this would make the propsed period of accounts 18 months and one day long, and have rejected the form. No matter how many times I play around with this concept in my mind I can not accept what they are saying. Apparently the company can choose 30th December 2008 as the new accounting reference date and make its accounts up to 31st December 2008, which would be accepted by Companies House. But this isn't the point! Has anybody ever come across this phenomenon? I believe the legislation refers solely to 'months' and doesn't mention 'days'. What's going on here?
Martin Downey

Replies (8)

Please login or register to join the discussion.

avatar
By carnmores
09th Apr 2008 10:21

The Feb example is the best
its case law - there was judgement given to support this dat. i remeber when i fell foul of it many moons ago

Thanks (0)
avatar
By stephenkendrew
08th Apr 2008 20:05

this isn't new!
Companies House have always had this policy. So, for example, accounts to 28 February, which need to be filed within 10 months, have always had to be with them by 28 December - 29 December and it's an automatic penalty.

Whilst I too can't get my head round this logic, they have always been consistent with this.

Thanks (0)
By David2e
08th Apr 2008 19:33

Been a long day
It's been a long day I can't even read David's response properly!

I am curious though... if the year end was 31 Mar, would they be thinking 6 months would be 30 Sep or 1 Oct?

Do you expect them to make sense anyway?

David Toohey
The Accountants Circle
Excel Accounting Tools | Wholesale Support Services

Thanks (0)
avatar
By Davidbonar
08th Apr 2008 18:40

Nonsense
I wonder whether they have a computer system that can't deal properly with leap years. 2008 is a leap year, so the period 1/7/07 to 30/6/08 inclusive is 366 days. It's possible that Companies House's computer thinks that's a year and a day, but that they don't care about that because it is permissible to have accounts for a period of a year and a day. However, if you start by (wrongly) thinking that that period is a year and a day, and then add 6 months to it, you can just about see how they might get to the absurd conclusion that the whole period is 18 months and one day.

"Month" isn't defined in the Companies Act, but there is some help in section 443. This sets out what is meant by a period of months in working out the filing deadline. Why one should need a definition for that, and not for the dozens of other references in the Act to periods of months, I have absolutely no idea.

What it says is that "the period [of x months] ends with the date in the appropriate month corresponding to the ... last day of the specified previous period." It then goes on to say that "if ... the last day of the specified previous period is the last day of a month, the period [of x months] ends with the last day of the appropriate month (whether or not that is the corresponding date)." The bit in brackets is the important bit. Since 30 June 2007 is the last day of a month, the period of 18 months ends on the last day of the month 18 months later (ie 31 December 2008), and not the corresponding day (which would be 30 December).

Now some bright spark at Companies House may say "But that doesn't apply to determining the length of a period of account, it's just for working out the filing date." Which is strictly true. But it is clearly absurd for "18 months" to mean one thing in one section and something else in another. Humpty Dumpty springs to mind.

Good luck.

Thanks (0)
avatar
By Ronnie Stanley
09th Apr 2008 13:18

Sorry Euan (& others) if that's what David is saying. I was really responding to Stephen's post.

I've found the link at Companies House which confirms the filing date change for accounts beginning on/after 6/4/08:

http://www.companieshouse.gov.uk/companiesAct/pdf/consultationResponse.pdf


Thanks (0)
Euan's picture
By Euan MacLennan
09th Apr 2008 11:41

Er! Ronnie?
David Bonar has already given us chapter and verse on the filing deadline rule change.

Thanks (0)
avatar
By Ronnie Stanley
09th Apr 2008 11:21

Companies Act 2006
Isn't this anomaly being removed by CA2006 or did I dream it?

So, for example, accounts to 30 April will be due by 31 January.

Can anyone confirm?

Thanks (0)
avatar
By Davidbonar
09th Apr 2008 16:57

It's still nonsense
I wasn't aware of the case law - thanks Nicholas for pointing that out.

So according to paragraph 7 of the document for which Ronnie provided the link, s.443 CA 2006 is about correcting a known fault in relation to the filing deadline, but the same known fault in relation to every other reference in the Act to a period of months is left uncorrected?

The government is even more daft than I thought. They've spent years on company law reform, produced the longest Act of Parliament ever, delayed implementation because Companies House systems weren't up to the job, and yet a period of months still doesn't mean what every normal person thinks it means, except in one particular instance where it does. How absurd.

Thanks (0)