Guide to the Accounting Reference Date (ARD)
A Company's Accounting Reference Date is its 'Year End' date for the Accounts.
When a new company is formed
, Companies House
automatically set the Accounting Reference Date (ARD) to the last day of the month in which it was formed
For example, XYZ Ltd was formed on 15/08/2015, so the ARD was set by Companies House to 31st August each year, so the first accounting period
for the Annual Accounts
would be 1 year and 16 days from 15/08/2015 to 31/08/2016.
This creates two problems:
1. Companies House Accounts Filing
Accounts are required to be filed with Companies House 9 months after the accounting year end
In the above example, the first year accounts to 31/08/2016 have to filed by 15/05/2017, which is 9 months (in exact days) after 15/08/2016 (as derived from the original formation date), so not
31/08/2016 which would be 9 months after the actual year end (ARD) which Companies House set up in the first place.
So the first accounts filing date at Companies House is shorter than the often quoted "9 months", and can cause inadvertant late filing.
2. HMRC Accounts and Corporation Tax Filing
HMRC do not accept a Corporation Tax Return (CT600) for a period greater than 12 months (365 days).
So the above Companies House ARD dating procedure not only creates a problem for themselves, but also for HMRC.
In the above example, HMRC would require two CT600's to be filed, firstly for the period 15/08/2015 to 14/08/2016, then secondly for the period 15/08/2016 to 31/08/2016.
This means that accountants have to create two Corporation Tax Returns
(CT600) from one set of accounts
, creating more work and more fees for the client.
Despite the above lengthy explanation of a very perplexing situation, this is very quick and easy to sort out.
Accountants often recommend to their clients to move the Accounting Reference Date (ARD) back by one month
. Remarkably this solves the whole problem.
In the above example, the company would reset its ARD back to 31st July every year.
The first accounts would then be for 11½ months to 31/07/2016, to be filed with Companies House by 30/04/2017, ie. 9 months later.
The first CT600 for HMRC would also cover the 11½ months and being less than 12 months is not a problem.
Shortening A Company's Accounting Period
There are no restrictions on shortening a company's accounting period.
Lengthening A Company's Accounting Period
A company's accounting period can only be extended once every 5 years
, apart from very rare and exceptional circumstances.
Therefore this is not a decision to be taken lightly.
Furthermore, if a company's accounting period is extended for its first ARD the original filing dates stay in force for that first accounting period - so a company could end up having to file accounts within 3 months of the accounting period end.
Changing A Company's Accounting Period - General Rule
A company's ARD cannot be changed if the filing date has passed, ie. once accounts have become overdue.
Links to more information
Accounting Reference Date
Your limited company's first accounts and Company Tax Return
Change your company's year end
Filing changes with Companies House