Thinking of Changing your Accounting Date?

Many companies, if they have had a particularly profitable year, will consider extending their accounting period in order to spread the resultant tax bill. Another reason for changing an accounting period could be to align companies within the same group. but is this always wise?

Changing a company’s accounting period is simple to arrange, just the completion of a form from Companies House, but the resultant accounting isn’t particularly straightforward.

For example, if Company X extends its accounting period by 6 months, it must submit 2 Corporation Tax returns for the resultant 18-month period. The first of these covers the first 12 months, and the second one the remaining 6 months.

This is further complicated by the fact that the deadline for both returns is the same, 12 months from the end of the new accounting date.

The final complications come when considering when the corresponding Corporation Tax payments are due. The second, six-month period is straightforward, and the payment date is the standard 9 months and 1 day after the new accounting date. However, the payment date for the earlier 12-month period is due 9 months and 1 day from the end of the period it covers, which is earlier that the deadline for the corresponding return.

If you are thinking of changing your accounting date, our specialist team will be happy to advise you. Just call us on 01524 67111 to set up a meeting at your premises or in our Lancaster office.