Does your UK subsidiary require an audit?

In the UK, all companies above set thresholds are required to be audited. This responsibility applies to companies registered in the UK, including UK subsidiaries of international corporations.

An audit helps preserve transparency and ensures compliance with legal and regulatory standards. It also helps improve shareholder and stakeholder confidence that the organisation is being run ethically and effectively.

Failure to comply with the UK’s audit regulations can mean legal and financial repercussions for the subsidiary and the parent company/owner.

Audit criteria for UK subsidiaries

UK subsidiaries of international corporations are treated in the same way as any other UK company where audit criteria and thresholds are concerned. A UK company must be audited if it has two or more of the following characteristics:

• more than £10.2million in turnover
• assets exceeding £5.1 million in total value
• more than 50 employees

If 2 of 3 of these thresholds are not breached, the company will be classified as a small company and may not need an audit. However, some other factors must be considered if the UK company is a subsidiary.

Could a smaller UK subsidiary still need an audit?

A UK subsidiary that is classified as a small company (in relation to the criteria above) may still require an audit. This depends on a few factors relating to the parent or group company that the subsidiary belongs to. A UK subsidiary will require an audit if its total group activity exceeds any two of the following criteria:

• The group generates turnover equal to or greater than £10.2 million (after making consolidation adjustments) or £12.2 million (before removing intragroup balances or transactions).
• The group's total assets are equal to or greater than £5.1 million (net) or £6.1 million (gross).
• The average number of employees across the group for the period is 50 or above.

Even if a subsidiary and its group as a whole fall below all the thresholds listed above, there may still be factors that mean an audit is required.

Speak to our audit team about your UK subsidiary

The Shorts Audit team offers meaningful guidance and support to ensure your UK subsidiary complies with all requirements. As part of the Praxity Global Alliance, we can collaborate seamlessly with companies and leading independent business advisors with UK interests from all around the world.