Filing online and on time

Filing online and on time

New companies have up to twenty one months from the date of first registration with Companies House in which to file their first set of accounts. All other companies have to submit their annual accounting returns to Companies House within nine months of their year end.

Whilst companies are free to choose any year end date, in practice many will choose to align either with the end of the tax year or the end of the calendar year. Given the number of companies using a 31 December year end, Companies House has issued a call for companies to file early and online if possible to ensure that their returns are accepted on time. This call to file online is particularly appropriate in 2021 as Companies House say they are continuing to follow Government covid-safe working guidelines and that can lead to delays in processing paper returns.

Companies House have also taken the opportunity to remind directors that it is their responsibility to ensure that returns are filed accurately and on time. Failure to do so, even if a company is dormant or not trading, could lead to directors receiving a fine, disqualification from being a director, or even a criminal record.

Interestingly in June 2021 the Government asked the Office for Tax Simplification (OTS) to consider whether the current UK financial year end of 5th April should or could be moved either to 31 March or 31 December. That review reported on 15th September 2021.

The review concluded that whilst there are clear benefits in adopting a tax year end with either aligns with a calendar year or calendar month end, the financial and opportunity costs of such a change would be significant. Quoting a minimum lead change time of between 18 months and two years, the OTS highlighted the challenge of changing legislation, operating systems and procedures at government and business/individual level.

Within the review the OTS estimated that revenue lost in year one of a transition to 31 March year end, and therefore a 360 day year, would be “between £0.4 billion (with reduced allowances) and £2.2 billion (without such adjustments).” Nevertheless the review also acknowledged that many unincorporated businesses and taxpayers already effectively use a March 31 cut off date for reporting purposes as this is simpler for them.

Furthermore, the review acknowledges that moving the tax year end to 31 March would also benefit those self employed individuals and landlords who will be caught by ‘making tax digital for income tax’ in 2023. Accordingly, the OTS recommends that the Government and HMRC should “pursue ways to formalise arrangements to allow (or even require) taxpayers to use a 31 March cut off to stand in for 5 April in respect of the calculation of profits from self-employment and from property income, ahead of the implementation of Making Tax Digital for Income Tax.”

With the review only having been published today (at the time of writing) we’ll keep an eye on further developments and report accordingly. In the meantime, the advice for companies and businesses remains to file online and file on time.

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