Many companies undergo shortening of the financial year in order to get the immediate cash that helps in growing the company income. The reason it is important to shorten the financial years lies in businesses’ eligibility to file R&D Tax claims so they can proceed further.
Let’s say your accounting period ends in December 2021. One way to make your company eligible for the R&D Tax claim is to shorten the financial year to July 2021. By doing this, your business can rightfully claim R&D Tax credits from August 2021 and receives a potential cash credit sooner.
This is actually a reliable resource, especially if your business is not performing well and is in a loss-making stage. This will increase the chance of getting R&D tax credits and improve the overall performance.
But, before you jump to any conclusion, it’s important to know your accounting period so that you can make bigger decisions promptly. So, to avoid any coming hassle, check it beforehand to ensure a smooth process.