If the company qualifies as a small company, then exemptions can be taken from audit and filleted accounts containing less detailed information can be filed on public record.

Assessing the size of a company, and what exemptions it qualifies for is relatively straightforward for a standalone company that is not part of a group. What is not always fully understood are the implications for a UK company when it is part of a wider group.

If a director files unaudited accounts for a company that is not entitled to the exemption, they are committing an offence.

The directors and the company may be subject to a fine or criminal proceedings for failing to comply with their statutory duties.

Do you need assistance to ensure that you are compliant?

Certain exemptions that would be available to a small standalone UK company, are not always available to a subsidiary held within a group structure. In particular, the requirement to have a UK company audited is dependent upon the size of the group to which it belongs, including overseas companies and errors can arise when this assessment is not carried out accurately.

The current size criteria that determines if a company or group is small and allows the UK subsidiary to take an exemption from audit, are listed below:

• Turnover: £15 million or less
• Total assets: £7.5 million or less
• Average number of employees in the period: 50 or less

To be exempt a company or group must be under two of the three criteria for two consecutive years.

The limits above came into effect for accounting periods commencing on or after 6 April 2025. Prior to that the limits were £10.2m, £5.1m and 50 employees respectively.

For a UK subsidiary that is part of a group, the whole group must be classified as small for the UK subsidiary to take the audit exemption. The assessment needs to be made for the group using the size criteria noted above, based upon the values in the consolidated accounts. Then only if the whole group is small, the UK subsidiary can take the audit exemption.

The group can also be assessed on what is known as the gross basis, where the size of the group is considered by amalgamating the results of each member of the group without eliminating inter-group transactions (consolidated basis), the applicable values under this basis are slightly higher:

• Turnover: £18 million or less
• Total assets: £9 million or less
• Average number of employees in the period: 50 or less

Again, the group needs to be under two of the three criteria for two consecutive years. The assessment can be made using a mix of the results from the test under the consolidated basis and gross basis.

Our firm has extensive experience in working with UK subsidiaries that are part of a group, and advise directors on their responsibilities and assist with their compliance obligations, including:

• Preparation of accounts;
• Audit of the company’s accounts;
• Preparation of corporation tax returns; and
• Support with company secretarial matters

We also offer a wide range of tax advisory and corporate finance services.

Why you should consider a new audit and advisory partner

If you do not currently feel that you are receiving adequate advice to ensure that you are compliant with your statutory obligations, or do not receive any proactive advice in relation to business and taxation matters, now is the perfect time to consider a change - before another year-end cycle adds unnecessary stress.

At Rickard Luckin, our Large Business Team specialise in supporting UK subsidiaries of international groups, working proactively with Finance Directors and Managing Directors to ensure:

• Confidence in assessing your filing obligations – proactive advice on your company and what is required of its directors
• Confidence in deadlines – timely, accurate financial statements aligned with group reporting
• Seamless global coordination – clear communication with overseas teams and auditors
• Year-round support – a named Director and dedicated team, not just during audit season
• Strategic insight – advice on UK tax, transfer pricing, and commercial challenges
• Excellent client service – a client Net Promotor Score® of +83*

We are proudly independent, with a team of over 150 professionals working together across our offices. We are also a member of MGI Worldwide, a global network of audit and advisory firms. This gives us the reach and capability to support cross-border businesses, while maintaining the personal service of a relationship-led firm.

We’d be pleased to arrange a meeting to discuss how we can support your UK operations more effectively. Feel free to book a consultation with us via our contact form to schedule some time for us to speak.

*We use the Net Promoter Score ® methodology to understand client satisfaction, and in our latest (2025) survey, our large business client survey results scored +83 (“excellent”).