Does a UK subsidiary need an audit?
Usually yes, if the parent group is not small, whatever the size of the UK company itself. We tell you at set-up, prepare the accounts and working papers to audit standard, and arrange the audit with a registered audit firm.
Whether the group's size makes the UK subsidiary audited
A UK subsidiary with three staff and £400,000 of turnover needs a statutory audit if the group above it is not small. The test looks straight through the UK company to the worldwide group. The auditor must be appointed before the year end, so the test belongs at set-up.
What you get
- Group-size test applied at set-up
- Audit-ready accounts and schedules
- Registered audit firm introduced
- Audit queries handled by us
- Timetable aligned with the group audit
What we do
The size test, on day one
Applied to the group's figures, not the UK company's, so you know in year one whether an audit is coming and when the auditor has to be appointed.
The exemption that will not help
The parent-guarantee route requires a parent established under UK law. An overseas parent cannot use it, so the only question is whether the group is small.
Audit-ready preparation
Accounts, lead schedules, reconciliations and supporting documents to the standard a registered auditor expects. This is what makes an audit short rather than expensive.
A registered firm introduced
Buzz is AAT-licensed and does not carry out statutory audits. We introduce a registered audit firm you engage directly and work alongside them.
Queries handled here
During fieldwork, so the UK manager and the group finance team are not answering questions about bookkeeping.
The group audit supported
The reporting package the parent's auditors specify, on their timetable, aligned with any UK statutory audit so the work is done once.
A UK private company is exempt from audit if it is small: two of turnover no more than £15 million, balance sheet no more than £7.5 million, and no more than 50 employees, for financial years beginning on or after 6 April 2025. A company that belongs to a group only gets that exemption if the group as a whole is small, tested on the worldwide group headed by the ultimate parent. The group limits are £15 million net or £18 million gross turnover, £7.5 million net or £9 million gross balance sheet, and 50 employees, again two out of three.
The result is that a UK subsidiary with £400,000 of turnover and three staff needs a statutory audit if its parent group employs 60 people in Chicago. The auditor must be appointed before the year end, so the position is established at set-up.
The parent-guarantee exemption
UK law allows a subsidiary to skip its audit where the parent guarantees its liabilities and files consolidated audited accounts at Companies House. That route is only open where the parent is established under UK law. An overseas parent cannot use it, so for a foreign-owned subsidiary the only question is whether the group is small.
What we do
- Apply the test at set-up using the group's figures, and tell you in writing whether the first year will need an audit and when the auditor must be appointed.
- Prepare for it. Buzz Accounting is licensed by the AAT and does not carry out statutory audits. We prepare the accounts, the lead schedules, the reconciliations and the supporting documents to the standard a registered auditor expects, which keeps the audit short and the fee down.
- Arrange the audit with a registered audit firm we work alongside, and coordinate the timetable with the group's own audit so the UK component figures are delivered when the group auditors want them.
- Handle the queries during fieldwork, so the UK manager and the group finance team are not answering questions about bookkeeping.
Timing
Audited accounts must still be filed within nine months of the year end. An audit of a small subsidiary with clean books typically takes a few weeks of fieldwork and review, so the auditor should be appointed before the year end, and ideally at set-up.
What we need from you
- The group's consolidated turnover, balance sheet total and headcount
- The group audit timetable and the component reporting instructions
- Any group accounting policies the UK accounts must follow
Common questions
Our UK company is tiny. Surely it does not need an audit?
If the worldwide group is not small, it does. The test looks through the UK company to the group. The test runs on the group's figures, not the UK company's.
Can Buzz do the audit?
No. Statutory audit is a reserved activity for registered audit firms and Buzz Accounting's AAT licence does not cover it. We prepare everything and work alongside a registered firm; you engage the auditor directly.
What does a UK audit cost?
The audit firm quotes it based on the size and complexity of the company. For a small subsidiary with well-kept books the fee is a fraction of what it is for a company whose records need reconstructing, so the preparation matters.
Can the group auditors audit the UK company?
If they are registered to audit in the UK, or have a UK member firm, often yes, and it can be efficient. Otherwise a UK registered firm audits the subsidiary and reports to the group auditors as a component auditor.
Related services
Bookkeeping and annual accounts
QuotedUK bookkeeping and statutory accounts
Xero set up in the parent's currency and account codes, bank feeds, monthly close, and year-end accounts under FRS 102, FRS 101 or IFRS filed at Companies House and with the tax return.
Management accounts and group reporting
QuotedA monthly pack in the group's format, on the group's close calendar
Monthly close, the reporting pack in the group's template, budget against actual, intercompany agreed, and the year-end schedules for the group auditors.
Expense management for a UK operation
QuotedA UK expense policy, the system behind it and the VAT it recovers
A UK expenses policy that matches HMRC's rules, an app your people will use, approvals that route to the right person, and the VAT recovered on everything eligible.
Get a fixed quote
Tell us where the parent company is and what the UK operation has to do.
