Your company is allowed to change your account year end date. For this purpose, you must make your application with companies House. Broadly, you are allowed to either shortened or extend your account year end date.
Ordinarily, Companies House set your Accounting Reference Date. The Accounting Reference Date is basically your company account year end date.
Your company accounting reference date is given to you on the day your company was incorporated. For example, if your company was incorporated on 17 November 2018, Companies House would give you the default accounting reference date which is 30 November.
Why change company account year end date
You may change your company account year end date to coincide with your VAT return quarter end date and yearly Pay As You Earn (PAYE) reporting with HM Revenue and Customs.
For example, if your company has a VAT return quarter end date of 31 March and payroll year end submission of 31 March, it would be administratively beneficial to have your company account year end date to be 31 March.
Or you may prefer your company account year end date to be 31 December. Every year is a new year.
Another reason may be that your company is part of a group, and you would like to have the same accounting year end with the rest of the Companies within the group. This is beneficial for consolidation of group accounts.
How to change account year end date
You must complete and submit the form AA01 to change your company accounting reference date with Companies House.
Companies House would not let Companies to use change of accounting reference date to avoid late filing penalty. For this reason, if your company accounts already overdue, you must file the overdue accounts first, then make the application. Otherwise your application would be rejected.
In addition, your new company account year end date must not result in your company accounts period over 18 months. Unless your company is in administration.
On the other hands, you must not go ahead to prepare your company account with the new year end date thinking you have submitted the AA01. Your application is not automatically approved.
For the safe side, you wait for Companies House to approve your new accounting reference date first. You can check your application status using the Companies House webcheck service. Your new accounting reference date is published there once approved.
You are not allowed to change accounting reference date more than once within five years. You must have a good reason to do so. In this case, you must disclose your reasons in your Companies House form AA01.
For instance, if your company is in administration. May be you have obtained approval from the secretary of state. Or you would like to align your accounting reference date to be the same with a parent or subsidiary company established in the European Economic Area (EEA). Or you are filing the form on behalf of an overseas company.
Lastly, your company director must sign the form AA01.
Company accounts with wrong year end date
Generally, Companies House would return Company accounts that is not prepared according to the official accounting reference date. Consequently, you would have to amend your company accounts and re-submit.
Amending your company accounts is not as simple as just change the account year end date. Your figures presented in the accounts must make up to your year end date. In other words, you may have to re-do your accounts. Your accountant may charge you twice for the same set of statutory accounts. In this case, your profit and loss figures would changed same as your corporation tax liability would changed too.
For instance, you prepared accounts for the accounting year ended 31 December 201X. This was your preferred new accounting reference date. Subsequently, your change of accounting reference date application for extension was rejected for whatever reasons. Consequently, you have to re-do accounts up to 31 May 201X which is your original accounting year end date. For this purpose, you have to remove 7 months worth of accounting data from your accounts.
Furthermore, your company would be liable for late filing penalty if your company accounts are late when you re-submit. Companies House would not waive your late filing penalty even if you appeal because your circumstance is not exceptional.