Changing a company accounting date

There are special rules which limit the ability to change your company’s year end date. A company’s year end date is also known as its ‘accounting reference date’ and is historically set by reference to the date the company was incorporated. Under certain circumstances it is possible to make a change to the year end and for some businesses this can have trading and / or tax benefits.

As a general rule, you can only change the year end for the current or previous financial year. Making a change to a year end date will also change the deadline for filing accounts (except during a new company’s first financial year).

There is no limit to the amount of times you can shorten a year end date but you can only extend the period to a maximum of 18 months once in every five years. The financial year can be extended more often under limited circumstances, for example, when the company has been placed in administration.

A request for a change to an accounting reference date can be made online (preferred and quickest option) using the Companies House online service or by using a postal version of the Change your company accounting reference date (AA01) form. No change can be made to a period for which accounts are overdue.

There is no overriding reason for using one date over another but there are a number of factors to take into account. The most common year end dates are 31 December (to coincide with the end of the calendar year) or 31 March (to coincide with the end of the tax year).

Record keeping for limited companies

Limited companies are required to hold a wide range of company and accounting records. This includes details of directors, shareholders, company secretaries and the results of any shareholder votes and resolutions.

The company must also keep a register of people with significant control (PSC register). The PSC register is used to identify and record the people who exert significant control over UK companies often known as beneficial owners. Companies must keep a record even if there are no people with significant control.

There is also a requirement to keep full accounting records including:

  • all money received and spent by the company, including grants and payments from coronavirus support schemes
  • details of assets owned by the company
  • debts the company owes or is owed
  • stock the company owns at the end of the financial year
  • the records you used to work out the stock figure
  • all goods bought and sold
  • who you bought and sold them to and from (unless you run a retail business)

The records must be held for 6 years from the end of the last company financial year they relate to, or longer if:

  • they show a transaction that covers more than one of the company’s accounting periods
  • the company has bought something that it expects to last more than 6 years, like equipment or machinery
  • you sent your Company Tax Return late
  • HMRC has started a compliance check into your Company Tax Return.

Company information on signs and stationery

There are a number of requirements that must be taken care of when running a limited company. One of the lesser-known requirements concerns the use of signs, stationery and promotional material.

A company is required to display a sign showing the company name at its registered office and at any other premises at which the business operates. The sign must be easy to read and visible at all times not just when the premises are open. If the business is being run from a residential property, the company is exempt and there is no requirement to display a sign.

There are also specific rules for business stationery. This includes the requirement to include the company’s name on all company documents, publicity and letters.

On business letters, order forms and websites, you must show:

  • the company’s registered number
  • its registered office address
  • where the company is registered (England and Wales, Scotland or Northern Ireland)
  • the fact that it is a limited company (usually by spelling out the company’s full name including ‘Limited’ or ‘Ltd’)

Consider signing up to PROOF scheme

One of the services offered by Companies House helps combat fraud and protect your company from unauthorised changes to records. The free service is known as the protected online filing (PROOF) scheme and means that any forms covered by PROOF can only be filed online. Companies House will reject any paper versions of the forms and send them back to the registered office address.

The use of the PROOF scheme prevents the filing of certain paper forms, including:

  • changes to your registered office address
  • changes to your officers (appointments, resignations or personal details)
  • your annual return

This can help combat fraudsters who try to hijack a company by changing the names of company directors and the registered address of the company. Once this has been done, the company becomes vulnerable to further fraud such as banks accounts being opened in the name of the ‘new’ directors. Companies House deals with around 50 to 100 cases of corporate identity theft every month.

An application to join the PROOF scheme should be made online using the Companies House online filing service.

Changing accounting date

There are special rules in place which limit the ability to change a company’s year end date. A company’s year-end date is also known as its ‘accounting reference date’ and is historically set by reference to the date the company was incorporated. Under certain circumstances it is possible to make a change to the year end.

As a rule, you can only change the year end for the current financial year or the one immediately before it. Making a change to a year-end date will also change the deadline for filing accounts (except if during a new company’s first financial year).

There is no limit to the number of times you can shorten a year-end date, but you can only extend the period to a maximum of 18 months once in every five years. The financial year can be extended more often under limited circumstances, for example, if the company has been placed in administration.

A request for a change to an accounting reference date can be made online using the Companies House online service or by using a postal version of the Change your company accounting reference date (AA01) form. No change can be made to a period for which accounts are overdue.

There is no overriding reason for using one date over another but there are several factors to consider. The most common year-end dates are 31 December (to coincide with the end of the calendar year) or 31 March (to coincide with the end of the tax year).

Companies House to pause strike off process

Companies House has announced that they have once again temporarily paused the voluntary and compulsory strike off processes. The hiatus is set to be in place for one month from 21 January until 21 February 2021. When a company is struck off, the company's legal existence is removed from the Companies House register. The strike off can be voluntary or compulsory. 

Companies House will continue to publish first Gazette notices for voluntary strike off applications to minimise the impact on those who have applied to close their company – but will not be publishing the second Gazette notice and striking companies off during this period. For companies on the compulsory strike off path, Companies House will not be publishing first and second Gazette notices.

Companies House have said that pausing the strike off processes will provide companies with more time to update their records and help them avoid being struck off the register. It’ll also protect creditors and other interested parties who might have had difficulties in receiving notices or registering an objection, or whose objections have not yet been processed.

Striking companies from Companies Register

There are a limited range of circumstances when a company can request to be removed from the register (known as being struck off). For example, a voluntary strike off can be requested by a dormant or non-trading company.

A limited company can be closed down by getting it 'struck off' the Companies Register, but only if it:

  • hasn't traded or sold off any stock in the last 3 months. For example, a company in business to sell apples could not continue selling apples during that 3 month period but it could sell the truck it once used to deliver the apples or the warehouse where they were stored.
  • hasn't changed names in the last 3 months
  • isn't threatened with liquidation
  • has no agreements with creditors, e.g. a Company Voluntary Arrangement (CVA)

If the company does not meet these conditions, then the company will need to be liquidated (also known as a 'winding up').

Before applying for a strike off, the company must be legally closed down. This involves:

  • announcing plans to interested parties and HMRC
  • making sure employees are treated according to the rules
  • dealing with business assets and accounts.

New IPO search facility

The Intellectual Property Office (IPO) is the official UK government body responsible for intellectual property (IP) rights including patents, designs, trademarks and copyright. 

The IPO has launched a new service that allows users to search for the goods and services they intend to use their trade mark on before they apply.

Intellectual Property Offices worldwide use a trade mark classification system that groups together similar goods or services into 45 different classes. This is referred to as the Nice Classification.

While a member state of the EU, the IPO contributed to and shared a common classification system called TMClass. TMClass is a classification search tool provided by the EUIPO. With the transition period relating to the UK’s exit from the EU ending on 31 December 2020, a new UK specific database was required.

The search UK trade mark classes service is available from the GOV.UK website. 

Consultations to crack down on fraud announced

The government has unveiled three new consultations to help combat fraud by reforming the UK’s register of company information. This follows an announcement earlier this year that Companies House will be reformed to clamp-down on fraud and money laundering, with directors unable to be appointed until their identity has been verified.

One of the consultations will seek views on how the new discretionary power for the registrar to query new, submitted information will work in practice. The proposals will help close loopholes that lead to abuse of the register, facilitating a crack down on the misuse of corporate structures by criminals.

The 3 consultations are as follows:

  • Improving the quality and value of financial information on the UK companies register. This consultation will examine how companies might be able to file accounts once only with government, instead of separately to Companies House, HMRC and other agencies. It will also look at other areas including the filing options available to small companies and digital filings.
  • Powers of the registrar. This consultation will examine the new discretionary power for the register to query information on a risk-based approach. The proposals will help close loopholes that lead to abuse of the register, facilitating a crackdown on the misuse of corporate structures by criminals.
  • Implementing the ban on corporate directors. Finally, this consultation will look at tackling opaque corporate structures. This would mean that corporate directors would be prohibited unless their own boards comprise all natural persons, and those natural persons have their identities verified.

Responding to a court judgement

In today’s precarious business environment many companies are unable to pay their debts. If this happens, your creditors can ultimately apply to the court to get their debts paid. This can be done either by getting a court judgement or making an official request for payment (known as a statutory demand).

If a court judgement has been registered against your business, you must usually respond with one of these options within 14 days: 

  • Pay off the debt.
  • Reach an agreement with the creditor to pay the debt in the future, for example by using a Company Voluntary Arrangement. This is a voluntary agreement to pay your business creditors over a fixed period of time.
  • Put your company into administration. This means you will be protected from legal action and nobody can apply to wind up your company during administration.
  • Apply to liquidate (‘wind up’) your company.
  • Challenge the court judgment. You can ask the court to cancel the county court judgment (CCJ) or high court judgment if you did not receive, or did not respond to, the original claim from the court saying you owed the money.

If you do nothing, the creditors can request to have your assets taken away by bailiffs or the sheriff. Your creditors can also apply to wind up your company if your assets are not enough to pay your debts.

There are similar measures that must be taken if you receive a statutory demand, albeit with a slightly longer period of 21 days to respond.

These are serious issues and proper professional advice should be taken if your company is insolvent.