Change of Accounting Date

There are a number of conditions that affect the change of an accounting period end date:

With the exception of the opening period and closing periods of accounts, the maximum span allowed between accounting dates is eighteen months. If the accounting period is longer than 18 months there are additional rules for the computation of the basis periods.
Closing year rules take precedence over these rules.
With the exception of the first three years of trading, if there are two changes of date in a five year period, the Revenue must be satisfied that the change is made for bona fide commercial reasons. A reduction in the tax bill is not a bona fide reason!
The Revenue must be notified of the change by 31 January following the tax year in which the change was made.

If the new account period is 18 months or longer click here for more details.

A change in the accounting date will fall into one of the following four categories:

1 - New period is less than twelve months and ends in the same fiscal year as the previous period

The basis period for the fiscal year in which the change is made will be a long period ending on the new accounting period end date. If there is any overlap profit available, overlap relief may be claimed.

For example a change from 31 May 2002 to 30 Nov 2002. Both dates fall in the 2002/3 tax year.
The 2002/3 basis period will be 18 months to 31/11/02. It is an 18 month period so 6 months of overlap relief may be claimed.

2 - New period is less than twelve months but ends in the fiscal year following the previous period

A twelve month basis period is constructed that ends on the new accounting period end date. This will mean that part of the profit from the preceding account period is taxed twice. This is stored as overlap profit.

For example a change from 30 Nov 2002 to 31 May 2003. The original period ends in the 2002/3 year, the new period ends in the 2003/4 year.
The 2002/3 basis period will be 12 months to 30/11/02. The 2003/4 basis period will be 1/6/02 to 31/5/03. The period from 1/6/02 to 30/11/02 is taxed twice and is stored as overlap profit.

3 - New period is longer than twelve months and ends in the fiscal year following the previous period

The basis period will be the whole of the new accounting period. As this will be longer than twelve months, if there is any overlap profit available, overlap relief may be claimed.

For example a change from 31 Oct 2002 to 31 Jan 2004. The original period ends in the 2002/3 year, the new period ends in the 2003/4 year.
The 2002/3 basis period will be 12 months to 31/10/02. The 2003/4 basis period will be 1/11/02 to 31/1/04. It is a 15 month period so 3 months of overlap relief may be claimed.

4 - New period is longer than twelve months and completely spans the following fiscal year

The basis period is constructed to a date ending twelve months before the new accounting period end date. This will mean that part of the profit from the preceding account period is taxed twice. This is stored as overlap profit.

For example a change from 31 Jan 2002 to 30 Jun 2003. The original period falls in the 2001/2 fiscal year and the new period falls in the 2003/4 year.
The 2001/2 basis period will be 12 months to 31/1/02. The 2002/3 basis period will be 1/7/01 to 30/6/02. The period from 1/7/01 to 31/1/02 is taxed twice and is stored as overlap profit.