Category: Corporate Governance & Regulation

There are special rules which limit the ability to change your company’s year end date. A company’s year end date is also known as its ‘accounting reference date’ and is historically set by reference to the date the company was incorporated. Under certain circumstances it is possible to make a change to the year end and for some businesses this can have trading and / or tax benefits.

As a general rule, you can only change the year end for the current or previous financial year. Making a change to a year end date will also change the deadline for filing accounts (except during a new company’s first financial year).

There is no limit to the amount of times you can shorten a year end date but you can only extend the period to a maximum of 18 months once in every five years. The financial year can be extended more often under limited circumstances, for example, when the company has been placed in administration.

A request for a change to an accounting reference date can be made online (preferred and quickest option) using the Companies House online service or by using a postal version of the Change your company accounting reference date (AA01) form. No change can be made to a period for which accounts are overdue.

There is no overriding reason for using one date over another but there are a number of factors to take into account. The most common year end dates are 31 December (to coincide with the end of the calendar year) or 31 March (to coincide with the end of the tax year).

Limited companies are required to hold a wide range of company and accounting records. This includes details of directors, shareholders, company secretaries and the results of any shareholder votes and resolutions.

The company must also keep a register of people with significant control (PSC register). The PSC register is used to identify and record the people who exert significant control over UK companies often known as beneficial owners. Companies must keep a record even if there are no people with significant control.

There is also a requirement to keep full accounting records including:

• all money received and spent by the company, including grants and payments from coronavirus support schemes
• details of assets owned by the company
• debts the company owes or is owed
• stock the company owns at the end of the financial year
• the records you used to work out the stock figure
• all goods bought and sold
• who you bought and sold them to and from (unless you run a retail business)

The records must be held for 6 years from the end of the last company financial year they relate to, or longer if:

• they show a transaction that covers more than one of the company’s accounting periods
• the company has bought something that it expects to last more than 6 years, like equipment or machinery
• you sent your Company Tax Return late
• HMRC has started a compliance check into your Company Tax Return.

If someone is being disqualified from being director of a company; he / she cannot run the affairs of a company.

A recent investigation by the Insolvency Service has seen a husband and wife disqualified from being directors for a total of 17 years. The husband and wife team were directors of a company that provided conference and event organisation services across the UK.

https://www.gov.uk/government/news/events-companys-collapse-shines-light-on-directors-prior-ban

The male director had resigned as a director of the company in November 2014 after he was disqualified for 6 years. However, investigators discovered that the banned director had continued running the company behind the scenes in breach of his disqualification and his wife was fully aware of the misconduct. The company was eventually wound up in October 2018.

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The disqualification means that the directors cannot be involved, directly or indirectly, in the formation, promotion or management of a company without permission of the court for 11 and 6 years, respectively.

Commenting on the case the Chief Investigator for the Insolvency Service said:

‘The length of this ban for the director and the disqualification of his wife, demonstrates that we will tackle those who try to get around their bans by appointing their spouse as director, while continuing to run the business themselves behind the scenes.’

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A company could face numerous situations when the shareholders might decide to close the limited company. This could be because a limited company structure is not relevant to the requirements of shareholder, the business is no longer active, or the company is insolvent. You will usually need the agreement of all the company’s directors and shareholders to close down the company.

https://www.gov.uk/strike-off-your-company-from-companies-register

The method for closing down a limited company depends on whether it is solvent or insolvent. If the company is solvent, you can apply to get the company struck off the Register of Companies or start a members’ voluntary liquidation. The former method is usually the cheaper option.

Members’ Voluntary Liquidation is the most tax-efficient method for most directors, as shareholders can obtain the value of the company instead of being charged income tax and capital gains tax.

It is the responsibility of the company directors to ensure that all of a company’s assets and liabilities are dealt with before it is dissolved. For example, you have settled any outstanding bills and collected all debts owed to the business. Any assets or rights (but not liabilities) remaining in the company at the date of dissolution can pass to the Crown as ownerless property.

Where a company is insolvent, the creditors’ voluntary liquidation process must be used. There are also special rules where the company has no director, for example if the sole director has died.

A company can also elect to become dormant. A company can stay dormant indefinitely, however there are costs associated with this option. This might be done if for example a company is restructuring its operations or wants to keep hold of a company name, brand or trademark. The costs of restarting a dormant company are typically less than starting from scratch again.

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Companies House has announced that they have new bank details effective from 1 September 2020. This is due to a Companies House change in status from a trading fund to a central government organisation. This has necessitated the introduction of a different type of bank account which come under the Government Banking scheme.

Any letters CH sends from 1 September 2020 will include the new bank account details and instructions. CH have also updated their bank details in any online guidance and emails.

The old bank account will remain valid and stay open for 6 months to make sure that all customers transition successfully to the new account. The old account will close at the end of February 2021.

Is Companies House part of HMRC?

Your responsibilities to us (eg choosing and registering a company name, company directors and secretaries, the registered office, filing annual returns and accounts) … your responsibilities to HMRC (eg corporation tax, self-assessment and PAYE)

Companies House has confirmed that the temporary measure to suspend compulsory strike-off action will be lifted from 10 October 2020. The temporary measure to pause compulsory strike-offs started in April 2020 in response to the coronavirus pandemic.

When a company is struck off, the company’s legal existence is removed from the Companies House register. The strike-off can be voluntary or compulsory.

From 10 October 2020, Companies Houses will resume the compulsory process to remove a company from the register if there’s reasonable cause to believe it’s no longer carrying on business or in operation.

This includes:

• company documents are outstanding, and Companies House have had no response to their letters
• letters sent by Companies Houses are returned undelivered
• the company has no directors

Companies that do not file their annual accounts or confirmation statement will normally receive two letters from Companies House. A notice is then published in the Gazette to tell the public that the registrar intends to strike-off the company.

From 10th October onwards, when compulsory strike-off action resumes, a company will face dissolution if there are no objections and the two-month period from the publication of the Gazette notice expires. Subsequently, authorities will strike off the company shortly thereafter.

If a company is in default and wants to remain on the register then action should be taken before 10 October 2020 to remain registered.