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FINANCIAL REPORTING DURING THIS CHAOS

If you have any questions, please get in touch with our COVID-19 Task Force here


RELEVANT AS OF 1:00PM 1 JULY 2020
Are you struggling to file your accounts on time? 

Companies House have announced that businesses with a filing deadline between 27 June 2020 and 5 April 2021 will now automatically get a 3 month extension to file their accounts. The announcement is designed to help businesses affected by COVID-19 avoid penalties and is an extension of support from Companies House. See here for latest information from Companies House.

The extension is detailed below for different businesses:

Company type Company has not had an extension or shortened their accounting reference period
Public limited companies (PLCs)* Filing deadline extended from 6 to 9 months
Private company Filing deadline extended from 9 to 12 months
LLP Filing deadline extended from 9 to 12 months
Overseas companies who are required to prepare and disclose accounts under parent law Filing deadline extended from 3 to 6 months
SEs* Filing deadline extended from 6 to 9 months

*For PLCs and SEs whose original accounts filing deadline fell on or after 30 June 2020

If you have already applied to extend your filing deadline by 3 months (which is what you previously had the option of doing) then that will still apply and the filing deadline will remain as the extended period.

If you have shortened your accounting reference period, your filing deadline would be 9 months (for public companies) or 12 months (for private companies) from the new accounting reference date or 3 months from the date of changing it; whichever is the later.

The government have said this policy will be kept under review and amended as necessary in light of the progress of the COVID-19 pandemic.

Please get in touch with  Alison Fovargue  if you want to chat this through.

How does covid-19 affect the preparation of your financial statements?

The numbers

In March 2020 the World Health Organisation declared a global pandemic and the UK went into Lockdown.  If your financial year end is before this Covid-19 is generally considered to be a ‘non-adjusting post balance sheet event’ which means disclosures in your financial statements but with no adjustments to the numbers.  For year ends after the pandemic was declared, the effects of the virus should be reflected in the financial statements.  You can read in detail about this here.

forecasts and going concern

When preparing financial statements, Directors have a responsibility to assess whether the company will be able to trade, from the date of approval, for at least the next 12 months.

Forecasting is inevitably challenging and even more so at the current time – assumptions will have to be made.  A starting point is to consider the current available cash facilities and whether the company can manage within them.  You can read in detail about this here.

IFRS 16 & COVID-19: Accounting for Rent Concessions

The IASB is simplifying the accounting for COVID-19-related rent concessions – a big boost for anyone applying IFRS 16 to large, complex portfolios. Click here to find out more.

Please get in touch with  Alison Fovargue  if you want to chat this through.

Carrying forward annual leave

Some businesses affected by COVID-19 are working non-stop, and as a result it’s anticipated that employees may not be able to take statutory minimum annual leave entitlement.  

To support these businesses, the government have announced that employees who have not taken all of their statutory annual leave entitlement due to COVID-19 will now be able to carry it over into the next 2 leave years.

The changes will amend the Working Time Regulations, which apply to almost all workers, including agency workers, those who work irregular hours, and workers on zero-hours contracts.

Where it’S not reasonably practicable for a worker to take some, or all, of the holiday to which they are entitled due to the coronavirus, they have a right to carry the 4 weeks into the next 2 leave years. This will not apply to the 1.6 weeks (bank holiday equivalent), but this can be carried forward one year by agreement between workers and employers.

If this measure is relevant to you it may be worth speaking to your employment law advisor to understand how the change to working time regulations affect your business. 

What’s the impact on financial statements?

Employers will need to consider accruing for unused annual leave entitlement for the purpose of preparing year end financial statements.  The tax treatment of the accrual will depend on who it’s for and when it’s paid.

Gender Pay Reporting

Since 2017, any organisation that has 250 or more employees have been required to publish and report specific figures about their gender pay gap.

Due to the Coronavirus outbreak, the Government have taken the decision to suspend enforcement of the gender pay gap deadlines for this reporting year (2019/20).

CORPORATE GOVERNANCE AND INSOLVENCY BILL

The government has introduced the Corporate Governance and Insolvency Bill in Parliament. This is big news on the insolvency front and along with a temporary (1 March 2020– 30 June 2020) relaxation of wrongful trading rules relating to the personal liability for Directors, should provide more flexibility to businesses in financial distress.  The headlines are that businesses should get more room to explore options and creditors may need to go with a restructuring plan even if they vote against it.

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