Compliance · 6 min read

UK accounts and audit for a subsidiary

Every UK company files annual accounts on a public register. Whether it also needs an audit depends on the size of the whole group worldwide, not the UK company — the thing that catches almost everybody. Deadlines, formats, small-company exemptions, the section 479A guarantee and penalties.

What every UK company files

Two things go to Companies House every year and one to HMRC. The confirmation statement confirms the directors, shareholders, PSCs and address. The annual accounts — balance sheet, notes and (unless the company is small or micro) a profit and loss account and directors’ report — are public and searchable by anyone. The CT600 corporation tax return, with full accounts and a tax computation, goes only to HMRC.

A first accounting period runs from incorporation to the accounting reference date, which defaults to the last day of the month of the first anniversary. We change it at formation to match the parent’s year end so the group consolidates cleanly.

Deadlines

Which accounts format

Size decides how much is disclosed. A micro-entity (two of £1m turnover, £500k balance sheet, 10 employees) files a very short balance sheet. A small company (two of £15m, £7.5m, 50) files under FRS 102 Section 1A and may omit the profit and loss account from the public filing. A medium or large company files full accounts. The thresholds rose in April 2025 and most subsidiaries we act for are small or micro on their own numbers.

From 2027 Companies House will require all companies to file a profit and loss account regardless of size, under the Economic Crime and Corporate Transparency Act. Plan for it: the UK subsidiary’s revenue and profit will be public.

Whether you need an audit — the group test

A company is exempt from audit if it qualifies as small. But a company that is a member of a group qualifies only if the group as a whole — parent, all subsidiaries, everywhere in the world — is small on the same thresholds (with gross figures of £18m and £9m, or net £15m and £7.5m). A UK subsidiary with £200,000 of revenue and two employees, owned by a US parent with 300 staff, needs a full UK statutory audit. This is the single most common surprise in our first-year conversations.

Two escapes exist. Under section 479A the parent can guarantee all of the subsidiary’s liabilities at the year end, file the guarantee and its own consolidated accounts at Companies House, and the subsidiary is then exempt. Most overseas parents decline to guarantee, and the parent’s consolidated accounts must be filed in the UK. Alternatively, if the UK company is dormant it is exempt. Subsidiaries of groups that are listed, or that include a bank, insurer or other regulated firm, cannot use the small-group exemption at all.

Appointing an auditor

The auditor must be appointed before the end of the first financial year requiring an audit. Leaving it until the accounts are due means an auditor who was not there at the year end has to audit opening balances and stock counts they never saw — expensive and slow. We establish the position within the first month, and if an audit is needed introduce a registered auditor then. Audit is reserved to registered auditors; we prepare the accounts and file and we do not audit. Expect £6,000–£15,000 for a small subsidiary with clean books.

Penalties

Late accounts at Companies House: £150 up to one month late, £375 up to three months, £750 up to six months, £1,500 beyond — all doubled if the previous year was also late. Late CT600: £100, then £100 more after three months, then tax-geared. Repeated failure to file confirmation statements leads to strike-off, and directors commit an offence. None of these come with a reminder; that is what the shared calendar is for.

Common questions

General information for overseas businesses considering the UK, correct to the best of our knowledge at the date shown. Not advice for your specific circumstances — rates and thresholds change, usually each April. Check with us or HMRC before acting on it.