Change financial year end in Hong Kong

Change Financial Year End in Hong Kong: The Process

Changing your company's financial year end requires filing Form NAC4 (Notice of Alteration of Accounting Reference Date) with the Companies Registry. First, secure approval from the directors or, where required, the company's members. This change alters your reporting deadlines, including the due dates for the annual return (Form NAR1) and the profits tax return. You must also notify your auditor and the Inland Revenue Department.

Hong Kong Accounting Reference Date Change

A company's accounting reference date marks the end of its financial year. It is set at incorporation on Form NNC1 and determines when financial statements are prepared and when annual accounting obligations fall due. To alter this date, file Form NAC4 with the Registrar of Companies. The Companies Registry (Cap. 622) permits a company to extend or shorten its financial year, provided the accounts period does not exceed 18 months in any single case.

Form NAC4 Hong Kong

Form NAC4 is the prescribed form for notifying a change of accounting reference date. It must state the new accounting reference date and the accounts period the change covers. File the form electronically through the e-filing portal or on paper. No fee is required, but the company must ensure the change is properly authorised before filing.

Alter Accounting Date Hong Kong

A director or the company secretary usually initiates the change, with directors passing a resolution to approve it. If the company's articles of association grant directors this authority, a members' resolution is unnecessary. Where the alteration creates an accounting period longer than 18 months, directors must obtain members' approval by ordinary resolution.

Companies Registry Financial Year End

The Companies Registry uses the company's accounting reference date to calculate the annual return (Form NAR1) due date. Changing the financial year end changes that due date. If the alteration coincides with an annual return's due date, the company cannot use the change to avoid filing a return already due. The change becomes effective on the date the Registrar records it.

Practical Steps

1. Confirm the proposed change is permitted under the company's articles.
2. Pass a directors' resolution (or a members' resolution if the period exceeds 18 months).
3. Complete Form NAC4 with the new accounting reference date and the affected period.
4. File Form NAC4 with the Companies Registry.

Tax Implications

Changing the financial year end alters the basis period for the profits tax return (Form BIR51) and the year of assessment to which profits are allocated. The Inland Revenue Department will apply the block extension scheme to the new due date only if the accounting date falls within the standard range. Inform your tax representative to ensure the correct return is filed. The auditor must also be notified, as the audit plan and deadlines will shift to match the new financial year end.

Constraints on the Change

The law prohibits creating a gap in accounts through a change. A company may not change its accounting reference date more than once in any five-year period, unless the change aligns the date more closely with its ultimate holding company or the Registrar accepts another reason.