How to Change Your Company’s Accounting Reference Date
ARD stands for accounting reference date and refers to the end of your business’s financial year. It determines the day your annual accounts are supposed to be made up to. Companies House sets this date as the anniversary of the last day of the month the company was formed. First, this post details what an accounting reference date is and how it benefits companies. Then, we discuss how to change your company’s accounting reference date (ARD) and detail the outcomes if you decide to change the length of your financial year.
What Is An Accounting Reference Date?
An ARD, or company’s accounting reference date, marks the point when a company’s financial year comes to an end. Essentially, it shows when your company’s annual accounts are due, and it tells you the deadline for submitting your financial statements to Companies House. The deadline is decided on the day your business is initially listed with Companies House. Most of the time, your ARD is set for the final day of the month when your company began, one year after that date. If your ARD is December 31, your company’s financial year will start on January 1 and end on December 31. Thus, you have to send your accounts to Companies House within nine months after the ARD, which would be September 30 of the following year.
The company’s accounting reference date is significant since it decides the dates included in your annual accounts. You have to think about when you must file your accounts and pay your Corporation Tax to HMRC. While a lot of businesses decide not to alter it, others may change it to reduce taxes, align with group members or use the same year as their trading business.
What Is The Process For Obtaining An Accounting Reference Date?
After incorporation, Companies House will determine your ARD and notify you about it. Emails will be sent to you by Companies House after you list your business through the Web Incorporation Service. When you go to your WebFiling account, you will also find your company’s accounting reference date listed.
Importance Of Accounting Reference Date:
Essentially, the accounting reference date is important since you rely on it when you make your company’s annual accounts. So, in these reports, you include every transaction made up to the company’s accounting reference date. Furthermore, your accounting reference date is important since it sets the deadlines for filing your company’s annual accounts and corporation tax return.
For further details regarding companies’ annual accounts, please check our blog post titled
How to Change Your Company’s Accounting Reference Date
You can modify your company’s ARD both through the online service and by mail. Here is a detailed explanation of how to change your company’s accounting reference date:
On The Companies House Webfiling Website Online
- The most convenient way to change your company’s accounting reference date is through Companies House WebFiling. Businesses usually pick this option since it is swift, and you receive an update almost immediately.
- Come to the Companies House WebFiling page online. If you want to sign in to your company, you will need the authentication code given to you. After you create your WebFiling account, the code is sent directly to the registered office you have on file. If you are unable to get a copy, you can ask Companies House to send you a new one.
- After logging in, select your company and look for the ‘Change accounting reference date’ option. Make sure to set the new date in the calendar you want to use. Reread the date before you submit, as it will let you know when to file your taxes for next year.
- After sending your form to Companies House, they will start working on your application. Usually, you’ll see a confirmation email a few minutes later, telling you your accounting reference date has been approved and adjusted by them.
Find out more about registered offices in our blog:
By Post
If you prefer the standard method, you may write your request by post to change the accounting reference date. While it saves time, you may still like it if you enjoy dealing with paper forms face to face.
1. Go first to the Companies House website to access and download Form AA01 (Change of accounting reference date).
- Fill out the information required for the application.
- The identification number of your company
- Company name
- A new date for the accounting reference is set.
- Take the time to check every piece of information, since a mistake can hinder the application process.
2. After completing the form, mail it to the following address:
- The Registrar of Companies manages the registration of all companies.
- Companies House,
- Crown Way,
- Cardiff,
- CF14 3UZ
for more details visit government website.
Form processing and updating your company information normally requires 10 working days at Companies House. Companies House no longer issues paper letters when your accounting reference date changes. To see your company’s accounting reference date, simply search for your company online.
What Are The Reasons To Change ARD?
A lot of organisations do not change their accounting reference date, but altering it can help their financial management. Here are the usual reasons organisations choose to alter their accounting year-end:
Financial Year-ARD (Annual Review And Discussion) Analysis
ARD typically aligns with the regular tax year, which spans from April 6 to April 5. With everything in one place following the 70-rule, there is less risk for mistakes in filing taxes. It helps tax accountants for both corporations and individuals to do their job more easily. If you set your ARD near the end of the year, you will find it easier to file your tax report.
Using The Charting Strategy Known As Group Companies Or Trading Cycles
Applying the same year-end cycle can benefit larger companies. It streamlines accounting for several business units, performance comparisons and difficulties related to taxes. If working by yourself, try to organise your financial year to match when your business or industry sees the most activity. Should holidays be your largest source of revenue, it could make sense to wrap up the year in January for your firm.
A Company May Opt To Lengthen or Shorten Its Financial Year Due To Strategy Or Business Considerations.
There are both commercial and strategic reasons why some companies change their year-end in accounting. During the sale or merger of a business, you might prefer to postpone finishing your financial year until your last set of accounts is complete. If you end your financial year earlier, you may be better prepared for things like hiring new directors or moving your firm.
Managing Cash Flow Or Setting New Business Achievements
Adjusting when taxes are paid by shifting your accounting year-end may assist you with your finances. Some businesses use it for company events such as launching new products or opening offices in new areas. When you change your financial year, you can make sure your accounts are managed according to these occasions.
What Are The Rules And Deadlines For Changing Your Company’s Accounting Reference Date?
You have to meet certain requirements and time deadlines to change the accounting reference date. Understanding the regulations from Companies House, you should learn how and when you can update your company records.
Maximum Range Of Time
Prolonging a financial year comes with some key challenges. It may be possible to extend your financial year to 18 months from when your accounting year begins. A financial year that started on January 1, 2024, may run until June 30, 2025. Only once every five years is it allowed to extend the financial year. There are also cases that do not accept equal treatment:
- The company is now being managed by administrators.
- It is linking the accounting reference date it uses to the parent or holding company. Because the circumstances were right, Companies House made the decision. Whenever you feel it’s necessary, you can shorten your company’s financial year as much as you like.
In Case The Accounting Reference Date Can’t Be Altered
You cannot always update your accounting reference date. This includes:
- Should the payment be overdue? You should process your overdue accounts first before applying for a change.
- If you have gone more than five years since your last year-end date, an exemption is needed.
- If adding your accounting term would go over 18 months.
Deadlines Are Dependent On The Customer’s Account Status
Your ARD needs to be changed once your due or filed accounts change.
- You can decide to extend or shorten your financial year depending on the company’s rules.
- If invoices are late, the changes you make in the ARD will not account for that. Make sure to file reports for delinquency before everything else.
- If you’ve logged your accounts before, you can request a change in the next accounting period, and it will only affect those records.
Conclusion:
Flexibility in budgeting and managing taxes and schedules can be gained by solving how to change your company’s accounting reference date (ARD). Performing the process online or using Form AA01 by post is straightforward; however, it all has to be done strictly in accordance with Companies House principles. You may shorten your financial year as many times as you need to, but extending it is only possible in certain situations. Before making any changes, confirm that your accounts are up to date. When you make responsible choices for your ARD, your company will save money and plan operations more efficiently.
Disclaimer: All the information provided in this article on “How to change your company’s accounting reference date?” including all the text and graphics, is general. It does not intend to disregard any of the professional advice.