A period of account is whatever period a company draws up accounts for. An accounting period is the period corporation tax is charged for, and it can never exceed 12 months. The two usually match, but accounting periods start and end on events set by sections 9, 10 and 12 of the Corporation Tax Act 2009, such as starting or ceasing to trade, entering administration or going into liquidation, so one set of accounts can contain two or more accounting periods.
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What is the difference between the two?
Section 1119 of the Corporation Tax Act 2010 defines a period of account as any period for which a person draws up accounts. For a company that is normally its financial year under the Companies Act 2006, ending on its accounting reference date. The first one runs from incorporation and can be more than six months but not more than 18 months (section 391(5)), and directors can later shorten or extend the year, as explained in changing a company’s year end.
An accounting period is a tax concept. GOV.UK describes it as the time covered by the Company Tax Return, which cannot be longer than 12 months and is normally the same as the financial year covered by the accounts. Tax rates, by contrast, are set for financial years running from 1 April to 31 March. CTM01405 explains that profits of an accounting period straddling 1 April are split between financial years on a time basis, by days.
So there are three clocks: the accounts year, the accounting period and the financial year. Deadlines for filing and paying run from the accounting period, which is why getting it right is the first step in any computation.
What starts an accounting period?
Section 9(1) says an accounting period begins when the company comes within the charge to corporation tax, or immediately after the previous one ends if the company is still within the charge. HMRC’s manual at CTM01410 says the most common triggers are the company becoming UK resident or acquiring a source of income. Three refinements are worth knowing:
- A UK resident company is treated as coming within the charge when it starts to carry on business (section 9(2)), so a newly formed company that has done nothing is usually outside the charge. See registering for corporation tax.
- A holding company whose only income is exempt dividends starts business when it first holds shares in a non dormant company (CTM01420).
- If a chargeable gain or allowable loss accrues when the company is not otherwise in an accounting period, one begins at that moment (section 9(3)).
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What ends an accounting period?
Section 10(1) ends an accounting period on the first of these events:
| Section 10(1) | Event |
|---|---|
| (a) | 12 months from the start of the accounting period |
| (b) | An accounting date of the company |
| (c) | The end of a period for which the company does not make up accounts |
| (d) | The company starting or ceasing to trade |
| (e) and (f) | Coming within, or leaving, the charge in respect of its trade, or all its trades if it has several |
| (g) | Becoming or ceasing to be UK resident |
| (h) | Ceasing to be within the charge to corporation tax |
| (i) and (j) | Entering or leaving administration |
Rule (a) is why long accounts produce two returns; see long first accounts. Rule (d) catches companies that start trading part way through a year or switch from trading to simply holding investments.
What happens in administration or liquidation?
For administration, section 10(2) treats the accounting period as ending immediately before the day the company enters administration. A new one begins and section 10(1)(j) ends it when administration ends.
Winding up has its own code in section 12, which replaces sections 9 and 10. An accounting period ends immediately before the winding up starts and a new one begins when it starts. After that, periods run for 12 months at a time until the winding up is completed, regardless of any accounts date. Section 12(7) fixes the start as the passing of a winding up resolution, or the presentation of a petition where a winding up order follows. Our guide to closing a limited company covers the wider tax position.
Why might accounts and tax periods not match?
- First accounts over 12 months. GOV.UK’s example is a company set up on 11 May with an accounting reference date of 31 May the following year, so its accounts cover 12 months and three weeks and need two returns.
- Dormant months. If a company trades only from part way through its first accounts period, the dormant months fall outside any accounting period.
- Changing the year end. GOV.UK says a company that lengthens its financial year must update its accounting period dates with HMRC before the original filing date of its return, or risk a late filing penalty.
- Cessation. Ceasing to trade ends an accounting period mid year, even if the accounts run on.
- 52 or 53 week years. Under CTM01560, accounts made up to slightly varying dates can be treated as 12 month periods to a mean date if the terminal date varies by no more than four days and the company agrees conditions in writing.
What if HMRC’s notice to file covers a different period?
A notice to deliver a return names a specified period, which may not be an accounting period. CTM93020 sets out four cases. If one or more accounting periods end in the specified period, a separate return is needed for each. If an accounting period only begins during it, typically for a new company that starts trading part way through, a return is needed for the earlier, dormant part. If the company is outside the charge throughout, the notice technically requires a return for the whole period, although HMRC will not insist where it accepts the company was dormant. Where accounting periods cannot be fixed because the company has not filed, CTM01550 says an officer can assess for any period of up to 12 months.
How does this work when a company winds down?
Illustration only. Pell Joinery Ltd makes up accounts to 31 December. It stops trading on 30 September 2026 but keeps a deposit account earning interest, and its members pass a resolution for a members’ voluntary liquidation on 16 November 2026.
| Accounting period | Why it ends |
|---|---|
| 1 January 2026 to 30 September 2026 | Ceasing to trade, section 10(1)(d) |
| 1 October 2026 to 15 November 2026 | Immediately before the winding up starts, section 12(2) |
| 16 November 2026 to 15 November 2027, or completion if earlier | Section 12(4) |
One set of accounts to 31 December 2026 would therefore need splitting across three accounting periods, each with its own return and payment date. If the company had no interest or other source after 30 September, it would have left the charge altogether under section 10(1)(h), and the next accounting period would begin when the winding up started under section 12(3).
What are the common mistakes?
- Assuming one set of accounts always means one tax return.
- Not telling HMRC about a new year end, so its records and the return periods disagree.
- Missing the accounting period that ends when trade stops, and with it a payment date.
- Using a 52 week year without the written mean date agreement.
- Carrying over the sole trader rules, explained in basis period reform, to a company; companies are taxed on accounting periods.
Filing and payment dates for each period are set out in corporation tax deadlines.
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Related Accountapedia entries
- Your company’s first corporation tax return
- Corporation tax during liquidation
- First statutory accounts for a new company
- Corporation tax limits for short accounting periods
- Corporation tax late filing penalties
- 52 or 53 week accounting periods
- Accounting for a demerger
- Can I change my VAT return periods
Sources
- legislation.gov.uk: Act 2010 c. 4, section 1119
- legislation.gov.uk: Act 2006 c. 46, section 391
- GOV.UK: Corporation tax accounting period
- GOV.UK: Manual page CTM01405
- legislation.gov.uk: Act 2009 c. 4, section 9
- GOV.UK: Manual page CTM01410
- GOV.UK: Manual page CTM01420
- legislation.gov.uk: Act 2009 c. 4, section 10
- legislation.gov.uk: Act 2009 c. 4, section 12
- GOV.UK: First company accounts and return
Reviewed by Christine Anderson, Broker, Solar Protect. Last reviewed 8 October 2026. Part of Accountapedia, the Solar Protect guide to UK tax and accounting. This page is general information, not personalised advice.