By Sarah Dixon, 23rd November 2020
With the end of the calendar year approaching, we often have clients enquiring about annual returns and how to choose a financial year end date for their companies. It is essential for companies to stay on top of key dates for annual returns to avoid unnecessary penalties including fines which accumulate on a daily basis, loss of audit exemption to involuntary dissolution by the Companies Registration Office (CRO). Sometimes, the hardest part of getting started is choosing a financial year end date for your Irish company.
What are the key dates to remember?
The first financial period commences on the incorporation date of the company and ends no more than 18 months later. The first key date is the first annual return which falls 6 months after the incorporation date of the company. This is used to provide a brief overview of the company and to enter the information into the public record. Financial statements are not required to be submitted with this annual return.
The next key date is 12 months after the first ARD, or 18 months after the incorporation date. This is when the financial statements must be submitted to the CRO and the company must calculate its preferred financial year end date, keeping in mind the date of this annual return. It is important to note that there are two rules for choosing a financial year end date:
- The Financial Period can be no longer than 18 months in length and;
- The financial year end cannot pre-date the ARD by more than 9 months.
Can I change a Financial Year End date?
Directors may wish to change their financial year end date to coincide with parent companies, other companies in their group or to align them with other filings which require financial statements. The company may change its financial year end date once in a five-year period and must always ensure it satisfies the two rules set out above in bold.
There are several ways of changing the financial year end date of a company under the Companies Act 2014. These include: Filing of annual returns early along with a B1 form – this will ensure each subsequent annual return is the same as the B1 date. Once every 5 years a company can move its ARD forward by 6 months by filing a B73 form with an on-time B1 form. However, the company must ensure that the 9-month rule is still followed. (There can’t be more than 9 months between the ARD and the date on the B1.) A company that is a member of a group may align its ARD with its holding company by filing a B78A Form. In this way there is no 5-year restriction on the company. Once every 5 years a company may alter its financial year by filing a B83 so long as this date does not extend the 18-month rule.
What date should I set as my company’s financial year end date?
It is ultimately the director’s discretion to choose a financial year end date so long as it follows the rules set out above. Many companies may choose December 31st as their financial year end date so as to coincide with the end of the calendar year. We recommend that the directors have a meeting early in the company’s ‘life’ to choose the preferred financial year end date in case any preparations need to be made such as filing the annual return early so the financial year end date satisfies the rules.
At Company Bureau, we have over 2 decades of experience in filing Annual Returns, dealing with the CRO and acting as Corporate Secretary. Our services include processing the annual return and guidance for choosing a financial year end date. If you would like more information please don’t hesitate to contact us or call 01 6461625. Our Company Secretarial team would be delighted to assist with any queries you may have in relation to financial year end dates or annual returns.
Disclaimer This article is for guidance purposes only. It does not constitute legal or professional advice. No liability is accepted by Company Bureau for any action taken or not taken in reliance on the information set out in this article. Professional or legal advice should be obtained before taking or refraining from any action as a result of this article. Any and all information is subject to change.