Over the past few weeks, the government has announced a raft of measures to help support freelancers, contractors and the self-employed through the Coronavirus pandemic.
From delaying IR35 reform in the private sector by a year to deferring self-assessment payments and upcoming VAT bills, the action taken by the Chancellor also includes an extension for companies that need extra time to file their accounts.
On 25th March, the government offered businesses of all sizes the opportunity to apply for a 3-month extension when filing their accounts. It’s an initiative that has been introduced to “help businesses through this period and enable them to thrive in the future”, according to Companies House Chief Executive, Louise Smyth, who also encouraged those “who believe they would benefit from this new flexibility to make an application in good time.”
In this article, we’ll outline what this measure means and explain how and when you need to apply for an extension, should your company need it. For context, we’ve also answered a handful of frequently asked questions about Company Accounts.
If you expect that your accounts will be filed late due to the Coronavirus and your filing deadline hasn’t yet passed, you should apply for an “automatic and immediate 3 month extension,” as the government puts it.
You might not be eligible if you’ve already extended your filing deadline this year, although Companies House has promised to consider each appeal on a case-by-case basis.
Everything can be done online in 15 minutes or so, by you or your accountant. You’ll need your Company Number, information that explains why you need an extension and - if you think it will strengthen your case - any documents that support your appeal. To apply, head to the government website.
Under the normal circumstances, Companies House will review your application and then make a decision. However, in this case, if you need more time as a result of COVID-19 - whether that’s because you’re unwell or your business has been impacted - you’ll be granted a 3-month extension instantly.
Every year, businesses need to submit their accounts to Companies House. If you engage an accountant, it’s likely that they’ll organise this on your behalf, but even so, it’s your responsibility as the Director of the company to ensure these are filed on time.
For the majority of freelancers and contractors, who are considered ‘micro-entities’, your company accounts only need to meet the statutory minimum requirements, meaning you can just submit your balance sheet. For larger businesses, Company Accounts tend to include this plus a profit and loss account, a Director’s report and several other documents.
It varies depending on when your limited company was incorporated and whether or not you’re in your first year of trading. If your business hasn’t filed accounts before - the deadline is 21 months after your incorporation date. After that, you have up to 9 months after your company’s financial year ends to file every year.
Your ‘year-end’ will likely be the last day of the month in which your company was formed. For example, if you incorporated your business on 10th March, your year-end will be the 31st March. For your first years accounts your filing deadline may be earlier than you expect. Whilst in this scenario you may expect the filing deadline to be 31st December, the first years accounts would be due to be filed by 10th December, 21 months after the incorporation date. The filing date for subsequent years will be 31st December. You will be able to check your filing date easily on the Companies House website.
Forget to apply for an extension and fail to file your accounts on time and you will be fined. Penalties can be hefty too, starting from £150 if you file up to a month late and reaching £1,500 if you miss the deadline by more than six months.
Whether you would like help with applying for this extension or have any questions regarding the government’s Coronavirus support package for the self-employed, please don’t hesitate to contact your SJD Accountant, or if you’re not yet a client of ours, please get in touch, below
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