What is your Company’s Financial Year?
Posted 24 Nov 15
Your company’s financial year is a period which covers your company’s annual (‘statutory’) accounts.
Just like a calendar year, a company’s financial year lasts 12 months with the exception of the first year when the period is counted from the date of company formation until the same month of the following year.
A company’s financial year should not be confused with the financial year or tax year, which is the period imposed by the Government and in the UK runs between April 6th and April 5th the following year.
Your company year will determine when various returns and submissions are due to HMRC and Companies House. The end-of-year date is often referred to as the accounting reference date (ARD). Unless your ARD is changed, your company’s financial year will end on the same day every year.
ARD is the term used in reference to the date when the annual accounts should be filed to Companies House. You will receive the ARD shortly after your company incorporation.
You need to deliver annual accounts to Companies House every year within 9 months of the accounting reference date.
As a company owner, at the end of each financial year you will need to:
prepare full (statutory) annual accounts
send a copy to every shareholder in the company
deliver a copy of the accounts to Companies House
deliver a copy of the accounts to HMRC as part of your company tax return
Annual accounts allow HMRC to track your company’s financial activity. In order to determine how much profit or loss your company has made and how much tax you owe HMRC, you will need to refer to your company’s accounts.
Can I change my company’s ARD?
If you need to extend or shorter your 12-month financial year for some reason, you can change your company accounting reference date after company formation. However, you will only be allowed to do so before the deadline for delivering the annual accounts for the current financial year.
If your annual accounts are overdue, you won’t be able to change your ARD.
You will be permitted to shorten the ARD by as many months as you like as often as you wish, however, extending the ARD can only be done once every 5 years up to a maximum period of 18 months from the previous ARD.
The simplest and quickest way to find out if you are eligible to change your company’s accounting reference date is by discussing your situation with professional and certified accountant.
At Tawanda Accountants we specialise in limited company accounts and bookkeeping and we will make sure our clients are always provided the financial strategy which best suits their individual business needs.
If you would like to find out how you can avoid any confusions related to your company’s financial year, contact our team.