Is the Accounts Filing Extension as helpful as it sounds?
Companies House recently announced that it will extend the filing deadline for all Accounts by three months. At first glance this is great news! Look a little closer though, and it’s not as helpful as you might think…
Coronavirus has had a HUGE impact on small businesses. To relieve the pressure on businesses during the pandemic, various measures were signed into law as part of the Corporate Insolvency and Governance Act. These measure include automatic extensions to the following:
- Confirmation Statements
Companies whose original filing deadlines fell before 30th June 2020 have automatically been granted a three month filing extension.
A company with a 31st March 2020 year end now has until the 31st March 2021 to file their accounts.
On the surface, this is great news, BUT this extension ONLY relates to the Accounts.
There is NO similar automatic extension for Corporation Tax.
Corporation Tax has to be paid nine months and one day after the year end. For a company to pay any Corporation Tax liability, this must be calculated and declared on a Corporation Tax Return, and is done so after the preparation of the Accounts!
For the purposes of full disclosure, it IS possible to estimate Corporation Tax, and adjust that amount later. To do so though, leaves the company open to interest charges.
What do we recommend?
Our recommendation is to carry on as normal! Prepare the accounts and file as due, which will have several benefits:
- You won’t incur any interest charges, which are a needless expense.
- You’ll be able to plan for the liability if the accounts are prepared promptly, rather than having to work out a rough estimate based on potentially inaccurate records.
- You’ll be able to use the accurate accounts to plan for the coming year. With all that’s gone on in the last four months, the more accurate information you can work from, the better!
If you’d like to discuss the impact of the extension on your accounts or Corporation Tax situation, please get in touch. There are some companies for whom it could be beneficial, but for the majority we feel that there is insufficient benefit.