CTM01560 - Corporation Tax: accounting periods: accounts made up to slightly varying dates

A company may make up its accounts to slightly varying dates, for example to the same Saturday in each year. The date between the earliest and latest of varying dates is a mean date.

When you have a case where:

• the accounts are made up to slightly varying dates, and
• the terminal date does not vary by more than four days from the mean date,

you can treat each account as an account for a period of twelve months to the mean date, provided that the company agrees in writing to all of the following conditions.

• It treats each account as an account for a period of twelve months to the mean date.
• It accepts that its CT self assessments are being made for an accounting period of twelve months ending on the agreed mean date.
• The profits chargeable to CT for the twelve month period to the mean date shall be treated as the profits of the accounting period for the purposes of shadow ACT (from 6 April 1999) and ACT (prior to 6 April 1999).
• That its accounting period for the purpose of ICTA88/S234 (5) and ICTA88/SCH13 (prior to 6 April 1999) and ICTA88/SCH16 shall be the period of twelve months ending on the mean date.

The last condition above means that the company will make returns under ICTA88/SCH13 (prior to 6 April 1999) and ICTA88/SCH16 for return periods ( CTM22050 and CTM35110) falling within that twelve month period of:

• franked payments actually made,
• franked investment income actually received,
• FID actually paid and received, and
• relevant payments actually made,

in those return periods and will account for ACT and IT accordingly. Any set-off claims under ICTA88/SCH16/PARA5 will be based on payments actually received under deduction of tax during the relevant return period. Any return under ICTA88/S234 (5) will be in respect of non- qualifying distributions actually made in the period of twelve months ending on the mean date.

You must find out whether the company agrees to the four conditions above and get its agreement in writing. The agreement in writing should reproduce these four conditions. If the company does not agree to all the conditions you should apply the relevant company taxation provisions strictly by reference to the statutory accounting periods. See also AC1402.

Example

A company which draws up its annual accounts to the Saturday nearest 31 December has formally agreed 31 December as the mean accounting date. For the year 2001 accounts are drawn up for the period 31 December 2000 to 29 December 2001. The company delivers a company tax return for the 12 months ended 31 December 2001. It delivers accounts for the period 31 December 2000 to 29 December 2001.

The Inspector treats the company’s self assessment as being made for an accounting period of 12 months ending on the agreed mean date of 31 December 2001.