Four things to consider before extending your accounts filing deadline

In June of this year, new measures were introduced through the Corporate Insolvency and Governance Act to relieve the burden on businesses during Coronavirus by allowing them longer to file accounts.

Should you take advantage of an extension? Here are four things to consider before you decide:

1. Funding assistance

Many businesses are seeking additional support to help them deal with the effects of the pandemic, and, if you’re one of them, you’ll likely need your latest accounts as part of lending applications. If you have your accounts ready and filed, you can more quickly access any new routes of funding as and when they become available.

The timely filing of accounts also helps provide confidence to banks, suppliers, creditors and staff during a period when it’s really needed.

2. Tax relief

There are several tax incentives available to UK businesses, including, and Research and Development Relief, and Patent Box – both of which we specialise in helping companies unlock.

Deciding not to extend your filing deadline means that applications for tax credits like those available for R&D are not delayed. If you’re a loss-making business you may even look to bring your accounting period forward, enabling earlier filing of tax computations and benefiting from reliefs. See this blog post for more about R&D tax credits for loss-making businesses.

If you are up to date with your accounts filing, you can also look at the current year position. HMRC have advised that in-year loss relief claims can be made by those companies who have records available to demonstrate a loss will be incurred. Making a claim to carry back in-year losses can assist with cash flow as tax refunds can be obtained at the earliest opportunity.

3. Corporation tax

If you have corporation tax to pay, the deadline for this is still nine months and one day after your year-end, unless you have specifically requested an extension.

So, even if you choose to take advantage of a filing extension, this wouldn’t affect when you need to pay any corporation tax owed.

4. Decision making

In times of uncertainty, preparation and insight are key. Extending your filing deadline delays your access to the data you need to plan for the expected, and the unexpected, especially if you’re predicting a loss.

Even if you’re in the middle of your current financial year, you could claim for predicted losses if you can demonstrate that loss (see #2 above).

 

While the extension has been provided to help businesses focus their efforts on recovering from or weathering the Coronavirus pandemic, you can see there are many more factors to consider when deciding to delay than simply resourcing.

We would urge companies to seek advice before making any decisions that could affect their financial position.

Your MPA advisor will be able to help you understand the best thing for you and your business, or call 0808 1598 481 and select option 2 to speak to our impartial accountancy team.