Is a new holding company exempt from audit

Holding company and its sub are part of a large group

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Hi, I would like to know if the holding company in this situation is dormant in its first year.  In a large group (this is important), two new companies have been set up.  One is the immediate holding company of the other.  Neither carry out any transactions during the first year, except for the subsidiary issuing share capital (£1 for instance) which is acquired by the holding company.  Clearly the sub is dormant and the holding company would be except for the fact it has acquired the shares.  But can the holding company be considered dormant (and thus avoid audit) in this scenario?  Remember, they're in a large group so not eligible for exemption from audit other than by being dormant. 

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By thevaliant
23rd Oct 2018 15:46

I must admit, my first thought was no, it needs an audit and I know we have a few dormant intermediate parents that have an audit report slapped on them 'just in case'.

But reading Section 480 of the Companies Act might suggest it is dormant; and can avoid the audit.

See what others chip in.

Failing that, you could always use Section 479 if you really wanted to avoid an audit.

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By Mike Bath
24th Oct 2018 11:14

Agree that the sub is dormant if the only accounting transaction is the issue of shares to subscribers. The holding co isn't dormant as it has acquired the shares in the subsidiary - this is a transaction that needs to be entered into Holdco's records, so Holdco isn't dormant in its first year. Holdco may be dormant, and hence eligible for audit exemption, in future periods but watch out for any divis paid out by the subsid being passed further up the group.

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