TAX ACCOUNTING PERIOD: This guide explains how financial years and accounting periods work.
The charges for Corporation Tax use a specific system of accounting periods. As a rule, they are the same as the accounting years used by Companies House. But, in some cases they may be different.
A Company Tax Return covers the time of the ‘accounting period‘ for Corporation Tax.
It is often the same as the financial year covered by the annual accounts of a company or association. But, it cannot be longer than a 12 months.
Note: The dates may not be the same in your limited company’s first accounts and Company Tax Return.
A Corporation Tax accounting period begins as soon as either of these occur:
- The company start to trade or it acquires a source of income.
- The end of the previous tax accounting period just occurred.
A Corporation Tax accounting period will end as soon as any of the following occur:
- The end of an accounting period at Companies House takes place.
- A 12 months term passes since the start of the period (a period cannot be longer than a 12 month term).
- The company starts to trade.
- The company stops trading.
- The company gets wound up.
Corporation Tax is payable 9 months and 1 day after the end of the tax period. You must send your accounts to HM Revenue and Customs within 12 months of the end of the tax period.
Accounts prepared for Companies House may not match the accounting period for HMRC. There is no need to prepare a second set of accounts for HMRC. The company can apportion the income from its Companies House period to its tax periods, on a daily basis.
Note: Accounting periods affect Company Tax Returns deadlines for paying Corporation Tax and filing accounts and Company Tax Returns.
Checking the Date of Accounting Period
You can check the dates of your accounting period by logging in to the secure online service at HM Revenue and Customs.
First Accounting Period
HMRC will send you a letter for Corporation Tax after setting up a private limited company in the UK. The letter gives you dates for your accounting period. Inform them if you believe the dates are incorrect.
Accounting Period and Financial Year Differ
What happens when an accounting period is different from the financial year? Check what you need to do if:
- It happens in the first year of business.
- The business stops trading (read more on dormant companies and associations).
- You are going to restart a non-trading or dormant limited company.
An accounting period can also be different to a financial year when the accounts cover:
- More than 12 months (e.g. after lengthening the company financial year end).
- Less than 12 months (e.g. after closing the company or shortening a limited company year end).
Accounts Covering More than 12 Months
What happens if your accounts cover more than 12 months? In this case you must file two separate returns. This is because an accounting period cannot be longer than 12 months.
Accounts Covering Less than 12 Months
What happens if your accounts cover less than 12 months? In this case the accounting period often ends on the same day. That means it will also be shorter than 12 months.
You should contact HMRC before you prepare your Company Tax Return. You will then get further instructions on how to enter the new dates for your accounting period.
Some small businesses use accounting software to file Company Tax Returns. In this case enter the new dates for the accounting period before you file a return.