How Shelf Companies Lost Their Appeal and What to Do Now
Also known as a ready-made company or an off-the-shelf company, a shelf company is a pre-registered business you can buy and customise.
Usually shortened to ARD, an accounting reference date is specifically when a company has to submit its annual accounts. The usual ARD of a business will come on the last day of the month that it was registered with Companies House. For instance, a business that was incorporated on 8th June 2015 will have an ARD of 31st June. Therefore, that business’ first ARD will come on 31st June 2016. The ARD will then fall on this date each following year, except if the business selects to change it. Any adjustment of the ARD will change the extent of the company’s financial year.
A company’s financial year
For nearly all companies, their initial financial year is somewhat lengthier than twelve months.
A business’s financial year starts on the day it is incorporated with Companies House. It finishes on the ARD. Annual accounts need to be concluded for Companies House and HMRC to submit all financial goings-on that happens throughout a company’s financial year.
Why have an accounting reference date?
The accounting reference date indicates the date at which your business’s financial year concludes. As each financial year comes to a close, you will have to:
- Arrange complete (statutory) annual accounts
- Send a print to each shareholder in the company
- Send a copy to Companies House
- Send a copy of the accounts to HMRC
The annual accounts are needed to report your business’s activity during that financial year, up to and including the accounting reference date. You will need to reference the accounts to determine the profit or loss that your business has made, whilst also knowing how much tax you will need to pay to HMRC.
How to get an ARD?
Companies House will decide on your business’s ARD and inform you directly after incorporation. If you list your company online via the Companies House Web Incorporation Service, you will be alerted through email. Your WebFiling account will also have your accounting reference date listed.
Should you choose to register a company through Your Company Formations online, you can get your accounting reference date on our Admin Portal.
Changing an Accounting Reference Date
You can change your company’s ARD subsequent to company formation – if you plan to prolong or reduce your twelve-month financial year. Nevertheless, you can only do this before the deadline for providing the annual accounts for the present or previous financial year. You can’t alter your ARD if your annual accounts are late.
Any changes you wish to make to your company’s financial year must be achieved by the nine month period after your company’s financial year-end. Once your financial year has been altered, the filing time limit for supplying your accounts will change to nine months from the new accounting reference date.
Changing your ARD
Most changes done online are registered in public records inside just a couple of hours.
To alter your financial year end and to tell Companies House, you’ll have to deliver the following material through online or postal application:
- The company number
- Full company name
- The date of your accounting reference period. This is the period of which your annual accounts are not yet overdue
- New ARD
- Signature of director
This data can be given in to Companies House via form AA01: Change Your Company Accounting Reference Date. This form can also be downloaded and sent to Companies House, or alternatively, you can complete it online through WebFiling. You can suggest a change of accounting reference date online through our Admin Portal, which is free of charge.
Prolonging Your Financial Year
You can extend the size of your company’s financial year by up to 18 months – or more if your business is in administration – however, you can do this once every five years. Companies are only permitted to lengthen the financial year more than once every five years in the resulting situations:
- If the business is in administration
- If Companies House gives specific permission
- If the dates are being aligned with a parent or holding company
Shortening Your Financial Year
Companies are allowed to reduce their financial year as often as they require, and by as many days as they want.
When your accounting reference date has changed, your company’s financial year will finish on that date each year; apart from you make any additional changes. Your annual financial accounts will, as a result, report all financial activity for the time beginning from the date of the company forming (or the day after the previous year’s accounting reference date) up to the new ARD.
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Are the financial year and accounting period for corporation tax the same thing?
The answer to this is no, they are not. It is important not to confuse the two terms. An accounting period for corporation tax is decided by HMRC for the preparation of a Company Tax Return and paying corporation tax.
This contrasts with the financial year of your company. That starts on the date your company is incorporated, whereas the accounting period for corporation tax doesn’t commence until your company becomes active, i.e. it begins trading. This may be the day your company is incorporated if you begin trading straight away. If this is the case, your financial year and accounting period will both commence on the same day. Nonetheless, if your business doesn’t become active immediately, your corporation tax accounting period will most likely begin at a later date.
At the point when your company becomes active, you must inform HMRC within three months. You should achieve this by registering your company for corporation tax online. After this, HMRC can approve the start date of your corporation tax accounting period. It will finish on your accounting reference date, exactly like the annual accounts.
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