Changing your year-end to a quieter period is a common and sensible move, but there are a few traps worth knowing about:
- Shortening is easy, lengthening is restricted. You can shorten your financial year as many times as you like (the minimum change is 1 day). You can lengthen it to a maximum of 18 months, but only once every 5 years, unless the company is in administration, you are aligning with a group company, or Companies House gives special permission. You can only change the current financial year or the one immediately before it, and you cannot change the year-end at all while the accounts are overdue.
- The filing deadline moves with the year-end. Changing the year-end changes the deadline for filing the accounts (9 months after the new year-end for a private company). The trap: if your new deadline has already passed on the date you make the change, you will be hit with a late filing penalty. Also, any extension you had to the old deadline falls away.
- Corporation Tax gets complicated. Your CT accounting period cannot be longer than 12 months. If you lengthen the financial year beyond 12 months, you end up with two CT accounting periods and have to file two Company Tax Returns. You must tell HMRC the new accounting period dates before the original filing date of the return, or you risk late filing penalties. The CT payment deadline is 9 months and 1 day after the end of each accounting period, so shortening your year-end can pull a tax payment forward.
Practically, do the Companies House change online and notify HMRC promptly, then diary the new filing and payment dates immediately. If you are shortening to a quiet period, double-check that the new filing deadline has not already passed before you submit the change.
