Making corrections after filing clients’ End of Year reports

This article explains which options are available if you need to make a correction in your clients’ accounts after you’ve filed either or both their Final Accounts and Corporation Tax return in FreeAgent.

FreeAgent’s End of Year report for a limited company includes a full set of accounts, a shortened version and Corporation Tax (CT600) return(s). Once you have approved the accounts and the client has signed them, a lock is placed on their accounts to prevent any further changes being made. You can remove this lock to make changes to the accounts by removing the signature and marking the accounts back to draft.

If you find that there are errors within their accounts after you’ve filed either or both of their Final Accounts and Corporation Tax return, you can either unlock their End of Year report to make the corrections this year or make the corrections next year.

Please note that FreeAgent can’t advise which option you should choose for your client.

If you haven’t yet filed your client’s Final Accounts or Corporation Tax return

If you haven’t yet filed either their Final Accounts or Corporation Tax return through FreeAgent, you can remove the signature and mark the accounts back to draft, then make changes to their accounts. Please note that if you’ve manually marked their Final Accounts or Corporation Tax return (or both) as filed, you’ll need to mark these as unfiled before you can remove the signature.

Marking their manually filed Final Accounts and Corporation Tax return as unfiled

To mark their Final Accounts report as unfiled, navigate to the relevant Final Accounts report and select ‘Mark as unfiled’.

To mark their Corporation Tax return as unfiled, navigate to the relevant Corporation Tax return and select ‘Mark as unfiled’.

Marking the End of Year report back to draft

Navigate to the ‘Accounting’ tab at the top of the screen and select ‘End of Year’ from the drop-down menu.

Select ‘Remove signature’.

Next, select ‘Mark as draft’.

Once you’ve made the necessary changes, you can re-approve the accounts and have the client sign them.

If you’re not planning to re-approve their End of Year report, we advise you to add an account lock for the period that their End of Year covers to prevent any future changes being made to this period.

If you’ve filed either or both their Final Accounts and Corporation Tax return

If you find that there are errors within your client’s accounts after you’ve filed either or both their Final Accounts and Corporation Tax return, you can choose to make the corrections in the next year or unlock their End of Year report to make the corrections this year.

Make the corrections next year

If you’ve already filed either or both of their End of Year reports for the relevant accounting year through FreeAgent, you can leave their accounts as they currently are. This will allow you to include any corrections for the current year’s accounts when you submit their Final Accounts and Corporation Tax return next year.

The FRS 105 reporting standard for micro-entities states under 5.4: “An entity shall recognise all items of income and expense in a period in profit or loss unless an FRS requires or permits otherwise, or unless prohibited by the Act. For example, under this FRS, the effects of corrections of material errors and changes in accounting policies are presented as retrospective adjustments of prior periods rather than as part of profit or loss in the period in which they arise (see Section 8 Accounting Policies, Estimates and Errors).”

There’s also further guidance under 8.14 – 8.17 Corrections of prior period errors: “To the extent practicable, a micro-entity shall correct a material prior period error retrospectively in the first financial statements authorised for issue after its discovery.”

Unlock their End of Year report

Alternatively, you can unlock your client’s Final Accounts report and Corporation Tax return if you’d prefer to fix the errors this year.

If you’ve already filed the original end of year accounts, you may need to submit amended accounts to include any changes. Please note that it’s not currently possible to file amended Final Accounts through FreeAgent, therefore you’ll need to file your client’s amended accounts with Companies House directly if you make any changes to their Final Accounts. Please see this official guidance for more information.

If you choose to unlock their End of Year report, we would strongly advise that you save copies of all the relevant reports that might be needed before the filing confirmation is removed. This will provide you with a record of the reports outside of FreeAgent should you need to look back at how they were before the filing confirmation and account lock were removed, and any changes subsequently made.

Please see below for guidance on how to unlock their Final Accounts and Corporation Tax return in FreeAgent.

Unlocking their Final Accounts report

To unlock your client’s Final Accounts, navigate to the relevant report and select ‘Unlock Accounts’. Please note that this will not 'un-file' the accounts with Companies House but will remove the record of it being filed from their FreeAgent account.

This will allow you to mark their End of Year report back to draft and make any necessary changes to your client’s accounts.

Once the necessary changes have been made, you can manually mark their Final Accounts as filed in FreeAgent by navigating to the relevant report and selecting ‘Mark as filed’.

Unlocking their Corporation Tax return

To unlock your client’s Corporation Tax return, navigate to the relevant return and select ‘Unlock Return’. Please note that this will not 'un-file' the CT600 with HMRC but will remove the record of it being filed from your FreeAgent account, as well as the submission receipt/IR mark.

This will allow you to mark the End of Year report back to draft and make any necessary changes to your client’s accounts.

FreeAgent will automatically mark the return as ‘amended’ when you unlock the return, but you can also check this by selecting ‘Edit Details’ and making sure the ‘Are you making an amendment’ option is set to ‘yes’.

Once the necessary changes have been made, you would need to consider whether this would then require you to file an amended CT600 with HMRC to match the final accounts, otherwise the company would have two different sets of accounts on record, one with Companies House and the other with HMRC.

If you do need to file an amended CT600, you’ll have the option to re-file an amended CT600 through FreeAgent by selecting ‘File online with HMRC’.

If you don't need to file an amended CT600, you can manually mark the Corporation Tax return as filed in FreeAgent by navigating to the relevant report and selecting ‘Mark as filed’.