Company is a subsidiary and a parent - small group??

Company is a subsidiary and a parent - small...

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Some clarification would be much appreciated!  In assessing small group thresholds, do I only look at the immediate subsidiaries of a parent company (the part of the group headed by it) or do I have to assess the whole group?  I.e companies above it as well?  The entity in question sits in the middle of a 4-level group structure chart, so has its own subsidiaries, but also has companies above it and the ultimate parent is 2 levels up.  The company meets the small company thresholds, I need to check the small group thresholds, but want to be clear that it is only the immediate subsidiaries I take into account and not the whole group (including those above it).  Any advice much appreciated, thank  you!

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By User deleted
17th Jun 2015 21:21

S.479(4) CA/06: “Group

S.479(4) CA/06: “Group company” means a company that is a parent company or a subsidiary undertaking, and (b)“the group”, in relation to a group company, means that company together with all its associated undertakings. For this purpose, undertakings are associated if one is a subsidiary undertaking of the other or both are subsidiary undertakings of a third undertaking. 

But do have a read of s.479A, CA/06 as well.

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By ginab
17th Jun 2015 23:56

@taxguru Thanks for the feedback, appreciate it!  I'm confused though - as s479 would imply that the whole group, including subsidiaries above this entity are taken into account when considering a small group at a lower level in the structure chart, but s383 (1) of CA/06 refers to parent companies in the context of "the group headed by it"  and that implies only the subsidiaries below the entity and not those above.  There appears to be a contradiction in the legislation then??

There are no consolidated accounts for this group at ultimate parent level (non-UK ultimate parent) but the structure is very complex with multiple levels and there is a UK group in the middle - UK parent (UK companies individually and collectively are small companies/group) but I'm confused by whether to include all the parent entities above the UK parent in assessing whether the UK parent is a small group or not.  Help!!

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A parent company qualifies as a small company in relation to a financial year only if the group headed by it qualifies as a small group.

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By Mike Bath
18th Jun 2015 10:53

It depends on why you're looking

Hi Ginab.  I think the answer here is that s383 and s479 are looking at different things, and hence define a group differently.  If you're looking at whether small company/group accounting exemptions are available (e.g. not having to consolidate) then you're in s383 territory and it's the company plus its subsidiaries that you need to consider.  If you're looking at the question of whether your companies have an audit requirement then it's s479 and you need to consider every group company both above and below - i.e. you cannot make a decision on the availability (or not) of audit exemption until you know if the entire global group would qualify as small.   

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