How to change your Hong Kong company's financial year end

Change Financial Year End Hong Kong Company

A Hong Kong company’s financial year end is its accounting reference date. The director or company secretary files Form NAC4 with the Companies Registry to change it. This single filing resets the date on which the annual accounts are drawn up. It also shifts every downstream deadline: the annual return and the profits tax return both move with it. The change must comply with the Companies Ordinance (Cap. 622).

Hong Kong Company Accounting Reference Date Change

Every Hong Kong company incorporated under the Companies Ordinance has an accounting reference date, the date its financial year ends. For a newly incorporated company, the first accounting reference date is the last day of the month that falls 18 months after incorporation. The company may pick a different date when it files its first annual return.

A director or the company secretary must sign Form NAC4 to make the change. There is no filing fee. The company must ensure the change is permitted under the Ordinance.

The accounting reference date can be changed to any date in the calendar year. The company cannot extend its accounting period beyond 18 months from the date of incorporation for the first financial year. For subsequent years, the accounting period cannot be extended beyond 18 months unless the Registrar approves a special reason.

Form NAC4 Hong Kong

Form NAC4 Hong Kong is the statutory form prescribed under section 367 of the Companies Ordinance. It notifies the Companies Registry of a change to the accounting reference date. The form requires the company’s name and company registration number, the current accounting reference date, the proposed new accounting reference date, the reason for the change, and a declaration that the change complies with the Ordinance.

File the form within 15 days of the date the change is made. A late filing attracts a penalty. The Companies Registry updates its records and issues an acknowledgement. The change takes effect from the date the form is filed. The company’s financial year end moves to the new date, and the due dates for the annual return and the profits tax return shift accordingly.

Alter Accounting Reference Date Hong Kong

The Ordinance allows one change in any five-year period, unless the change aligns the company with a parent or complies with a statutory requirement. The company cannot change its accounting reference date to a date that produces an accounting period longer than 18 months. If the current date is 31 March and the company wants 31 December, the resulting 21-month period is not permitted. Shorten the accounting period first.

The board of directors must approve the change. No shareholder resolution is required unless the articles say otherwise. Record the decision in the board minutes.

Hong Kong Company Year End Change

A Hong Kong company year end change affects several statutory obligations. The two that matter most are the annual return and the profits tax return.

Annual Return

File the annual return on Form NAR1 within 42 days of the company’s return date. The return date is the anniversary of incorporation or, if the accounting reference date has changed, the new date. When the accounting reference date changes, the return date changes with it. File the next annual return by the new return date. If the change creates a longer gap before the next return falls due, the company must still file the annual return for the period already passed.

Profits Tax Return

The Inland Revenue Department issues profits tax returns based on the accounting reference date. Notify the IRD of the change. The IRD then issues a profits tax return for the new accounting period. File the profits tax return on Form BIR51 within one month of the date of issue. The IRD grants an extension of up to six months for companies with accounting periods ending on 31 December.

Audit Period

The audit period is the period covered by the audited financial statements. When the accounting reference date changes, the audit period changes. Inform the auditor so the audit can be planned for the new period. A shorter accounting period may mean a quicker audit. A longer period may take more time and increase the audit fee.

Extend Accounting Period

A company extends its accounting period to align with a parent or to defer preparation of financial statements. The first accounting period can run up to 18 months. For subsequent periods, the limit is 18 months unless the Registrar grants an extension.

To extend the accounting period, file Form NAC4 with the new accounting reference date and state the reason. The Registrar decides whether the reason is acceptable. Common reasons include aligning with a parent company’s financial year, preparing for a merger or acquisition, and changing the business cycle. The extension must not push the accounting period beyond 18 months. If it does, apply to the Registrar for a special extension.

Shorten Accounting Period

Shorten the accounting period to bring it in line with a calendar year or to change the date financial statements are prepared. File Form NAC4 with the new accounting reference date. Shortening is simpler than extending. Change the accounting reference date to any date within the current financial year. If the current date is 31 March and the company wants 31 December, file Form NAC4 to shorten the period to 31 December.

File the annual return and profits tax return for the shortened period. Complete the audit for the shortened period. Plan the change so no filing deadline is missed.

Notification to the Inland Revenue Department

Notify the Inland Revenue Department when the accounting reference date changes. The IRD uses that date to time the issue of the profits tax return. Without notice, the IRD may issue the return for the wrong period. Write to the IRD. State the company’s name, business registration number, the date of the change, and the new accounting reference date. The IRD updates its records and issues the profits tax return for the new period.

Notify the auditor. Notify banks, lenders, and shareholders, any party that relies on the company’s financial statements.

Practical Considerations

Changing the accounting reference date is straightforward but needs planning. The change resets the due dates for the annual return and the profits tax return. Confirm the company can meet the new deadlines. The audit period shifts; tell the auditor and expect the audit fee to adjust. The change may affect the company’s tax position, consult a tax adviser. File within 15 days. Prepare Form NAC4 in advance and lodge it promptly.

The Companies Registry publishes guidance at cr.gov.hk. The IRD publishes guidance at ird.gov.hk. Refer to both for current requirements.