Malcolm ZoppiThu Sep 28 2023
Understanding What an Accounting Reference Date Is – UK Guide
The accounting reference date is the end of the accounting period for a company, which is used to prepare and file the annual accounts.
In the United Kingdom, all limited companies must have an accounting reference date (ARD) as part of their company formation process. The accounting reference date is a crucial element in determining the financial year of the company, which has several implications for the filing of annual accounts with Companies House and the corporation tax accounting period.
The accounting reference date is the end of the accounting period for a company, which is used to prepare and file the annual accounts. Companies House requires all limited companies to file their annual accounts within nine months of the accounting reference date. The financial year of a company can be either the calendar year or any other year, as long as it does not exceed 12 months.
The corporate tax accounting period is also aligned with the company’s financial year. Any changes to the accounting reference date will have an impact on the corporation tax accounting period, as well as the filing deadline for the annual accounts.
Companies should be aware of the importance of the accounting reference date and ensure that they comply with all regulations and deadlines set by Companies House and HMRC.
Key Takeaways
- An accounting reference date (ARD) is a specific date that marks the end of a company’s accounting period.
- The ARD is used to determine the company’s financial year, which has several implications for the filing of annual accounts with Companies House and the corporation tax accounting period.
- All limited companies must file their annual accounts within nine months of the accounting reference date.
- Changes to the accounting reference date will have an impact on the corporation tax accounting period and the filing deadline for annual accounts.
- Companies should ensure that they comply with all regulations and deadlines set by Companies House and HMRC.
What is an Accounting Reference Date?
An accounting reference date (ARD), also referred to as the year end, is a crucial element in the financial year of a UK company. It marks the end of the accounting period that a company uses to prepare its financial statements and tax returns. When a limited company is formed in the UK, it is required to select an accounting reference date as part of the company formation process. This date signifies the end of the company’s financial year, and it is used to determine when the annual accounts must be prepared and filed with Companies House.
Companies House is the UK government’s official register of companies and is responsible for ensuring compliance with UK company law. The length of a company’s accounting period is typically 12 months, but it can be longer or shorter, depending on when the accounting reference date falls.
The accounting reference date is also used to determine the length of the corporation tax accounting period, which is the period of time used to calculate a company’s corporation tax liability. In general, the corporation tax accounting period will be the same as the company’s financial year. However, there are certain circumstances in which the two periods may differ, such as when a company changes its accounting reference date.
How is an Accounting Reference Date Determined?
The accounting reference date (ARD) is determined based on specific factors, such as the anniversary of the last day of the month in which a company was incorporated. For newly incorporated companies, the ARD is automatically set as the last day of the month in which the company is incorporated. Subsequent ARDs will be set to the anniversary of the last day of the month in which the company was incorporated. This date signifies the end of the company’s financial year.
It is possible to change the ARD, either to lengthen or shorten the company’s financial year, but certain restrictions apply. Companies can typically lengthen their financial year by up to 18 months, but they cannot shorten it by more than one day. This change can only occur once every five years, and companies need to submit the appropriate Companies House forms to make the change.
It is important to note that the first accounting reference date cannot be changed, and changes to subsequent ARDs after the first change must be made using the appropriate Companies House forms. Additionally, any change made to the ARD will affect the filing deadline for the company’s annual accounts and the corporation tax accounting period, so companies must ensure they comply with the relevant regulations and deadlines set by Companies House and HMRC.
Implications of Changing the Accounting Reference Date
Changing the accounting reference date can have significant implications for a company, particularly in terms of its financial year and related deadlines. If a company changes its ARD, it will also impact the filing deadline for its annual accounts and the corporation tax accounting period.
It is vital for companies to ensure that they comply with the relevant regulations and deadlines set by Companies House and HMRC. Failure to do so can result in penalties and other consequences that may harm the business or the company’s reputation.
Company’s Financial Year
The ARD determines a company’s financial year. Thus, changing the ARD will also affect the company’s financial year. If the ARD is shortened, the financial year will be shorter, and vice versa. As a result, this may impact the company’s accounting procedures and systems, which may require adjusting.
Accounting System
Furthermore, changing the ARD can impact various aspects of the company’s accounting systems. For example, if the financial year is shortened, the company’s accounting software may need to be adjusted to reflect the new reporting period. This might involve updating the software’s settings, modifying the chart of accounts, and reconfiguring financial reporting templates.
Filing Deadline
The ARD also determines the deadline for filing a company’s annual accounts with Companies House. The filing deadline is usually nine months after the end of the financial year. If the ARD is changed, the deadline for filing the annual accounts will also change. It is crucial to note that failure to file the accounts on time can result in hefty penalties.
Company’s Annual Accounts
Changing the ARD can also impact a company’s annual accounts. If the financial year is shorter, the company will have less time to prepare its annual accounts. This may result in rushing through the process, leading to potential errors or problems. Filing accurate and timely annual accounts is crucial to maintain a company’s reputation and financial stability.
Corporation Tax
The corporation tax accounting period is aligned with the company’s financial year. Changing the ARD, which determines the financial year, will also impact the corporation tax accounting period. This can have implications for the company’s tax liability and overall financial planning. Failure to comply with the relevant corporation tax regulations can result in penalties and damage the company’s reputation.
For instance, if the financial year is extended, it can provide additional time for tax planning strategies and allow the company to optimise its tax position. On the other hand, a shorter financial year may require accelerated tax payments or adjustments to tax planning initiatives.
Overall, modifying the ARD can have significant implications for a company’s accounting procedures and systems. It is crucial for the finance and accounting teams to understand and adapt to the changes to ensure accurate and timely financial reporting and compliance with relevant regulations.
FAQ
Q: What is an accounting reference date (ARD)?
A: An accounting reference date (ARD) is the end date of a company’s financial year. It is used to calculate the deadlines for filing annual accounts and other statutory documents.
Q: How long is an accounting period?
A: An accounting period is the period of time covered by the company’s financial statements. It can be any length up to 12 months, but cannot exceed 18 months.
Q: What is corporation tax?
A: Corporation tax is a tax on the profits made by companies. It is calculated based on the company’s accounting period for corporation tax.
Q: What is a corporation tax accounting period?
A: A corporation tax accounting period is the period of time for which a company must calculate and pay its corporation tax. It is usually the same as the company’s financial year.
Q: What is Companies House?
A: Companies House is the registrar of companies in the UK. It is responsible for incorporating and dissolving companies, and for storing and maintaining company information.
Q: How can I change my accounting reference date?
A: You can change your accounting reference date by filing a special form called Form AA01 with Companies House. This form must be submitted before the end of the current accounting reference period.
Q: What is the financial year end?
A: The financial year end is the last day of a company’s financial year. It is the date on which the company’s financial statements are prepared and finalised.
Q: How can I find my accounting reference date?
A: You can find your accounting reference date by using the Companies House service. Simply search for your company name or registration number, and the accounting reference date will be listed.
Q: What is the start date of a company’s financial year?
A: The start date of a company’s financial year is the first day of the accounting period. It marks the beginning of the company’s financial reporting for that particular period.
Q: Can I change my company’s financial year end?
A: Yes, you can change your company’s financial year end. However, you must follow certain rules and restrictions set by Companies House. It is recommended to seek professional advice before making any changes.
Q: What is an accounting reference date?
A: An accounting reference date, also known as the company’s accounting reference date (ARD), is the date that marks the end of the company’s financial year. It is used to determine when the company’s annual accounts should be prepared and submitted.
Q: How can I find out my company’s accounting reference date?
A: You can find your company’s accounting reference date on your company’s Companies House profile. It is also mentioned on your company’s annual accounts and confirmation statement.
Q: Can I change my company’s accounting reference date?
A: Yes, you can change your company’s accounting reference date. To do so, you must file the necessary forms with Companies House. However, please note that certain restrictions apply, and you can only change the date once in a financial year.
Q: What is the ‘next accounts made up to’ date?
A: The ‘next accounts made up to’ date is the date by which your company’s next set of annual accounts must be prepared. It is usually the day before your accounting reference date.
Q: When should I submit my company tax return?
A: Your company tax return is due 12 months after the end of your accounting reference period. The accounting reference period is the period for which your company’s financial statements are prepared.
Q: Can I make my company’s financial year longer or shorter?
A: Yes, you can change the length of your company’s financial year by changing your company’s accounting reference date. You can either lengthen or shorten the financial year, subject to certain restrictions and limitations.
Q: What happens if my company’s financial year is longer than 12 months?
A: If your company’s financial year is longer than 12 months, you will need to file additional accounts for the extended period. These accounts are known as ‘short period accounts’ and should cover the period between the original accounting reference date and the new one.
Q: What happens if my company’s financial year is shorter than 12 months?
A: If your company’s financial year is shorter than 12 months, you will still be required to file annual accounts and a company tax return for that period. The accounts should be prepared and submitted within the usual timeframe.
Q: What if my company is in administration?
A: If your company is in administration, the accounting reference date is still applicable. However, the administrator will be responsible for preparing and filing the company’s annual accounts and tax returns on behalf of the company.
Q: What is the first financial year of a newly incorporated company?
A: The first financial year of a newly incorporated company starts on the day of its incorporation and ends on the date specified as the accounting reference date. For example, if a company is incorporated on January 1 and its accounting reference date is December 31, the first financial year would be from January 1 to December 31 of the following year.
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Disclaimer: This document has been prepared for informational purposes only and should not be construed as legal or financial advice. You should always seek independent professional advice and not rely on the content of this document as every individual circumstance is unique. Additionally, this document is not intended to prejudge the legal, financial or tax position of any person.