Companies Act 2006

Exemption from audit: small companiesU.K.

477Small companies: conditions for exemption from auditU.K.

(1)A company that [F1qualifies as a small company in relation to] a financial year is exempt from the requirements of this Act relating to the audit of accounts for that year.

(2)F2. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(3)F2. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(4)For the purposes of this section—

(a)whether a company qualifies as a small company shall be determined in accordance with section 382(1) to (6), F3. . .

(b)F3. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(5)This section has effect subject to—

section 475(2) and (3) (requirements as to statements to be contained in balance sheet),
section 476 (right of members to require audit),
section 478 (companies excluded from small companies exemption), and
section 479 (availability of small companies exemption in case of group company).

Textual Amendments

F1Words in s. 477(1) substituted (1.10.2012 with application in accordance with reg. 2 of the amending S.I.) by The Companies and Limited Liability Partnerships (Accounts and Audit Exemptions and Change of Accounting Framework) Regulations 2012 (S.I. 2012/2301), regs. 1, 4(a)

F2S. 477(2)(3) omitted (1.10.2012 with application in accordance with reg. 2 of the amending S.I.) by virtue of The Companies and Limited Liability Partnerships (Accounts and Audit Exemptions and Change of Accounting Framework) Regulations 2012 (S.I. 2012/2301), regs. 1, 4(b)

F3S. 477(4)(b) and preceding word omitted (1.10.2012 with application in accordance with reg. 2 of the amending S.I.) by virtue of The Companies and Limited Liability Partnerships (Accounts and Audit Exemptions and Change of Accounting Framework) Regulations 2012 (S.I. 2012/2301), regs. 1, 4(c)

Modifications etc. (not altering text)

C1Ss. 477-479 applied (with modifications) (1.10.2008) by The Limited Liability Partnerships (Accounts and Audit) (Application of Companies Act 2006) Regulations 2008 (S.I. 2008/1911), reg. 34 (as amended: (1.10.2012 with application in accordance with reg. 2 of the amending S.I.) by S.I. 2012/2301, regs. 1, 20(3); (E.W.S.) (1.10.2018) by S.I. 2018/1030, regs. 1(2), 31(4); (31.12.2020) by S.I. 2019/177, regs. 2, 50(a) (as amended by S.I. 2020/335, regs. 1, 3, 4 and S.I. 2020/523, regs. 1(2), 22, 25(c); 2020 c. 1, Sch. 5 para. 1(1)); (N.I.) (6.4.2022) by S.R. 2022/121, regs. 1, 31(4); (N.I.) (3.10.2022) by S.R. 2022/234, regs. 1, 31(4); (N.I.) (1.4.2023) by S.R. 2023/59, regs. 1, 31(4); and (N.I.) (29.9.2023) by S.R. 2023/148, regs. 1, 31(4)(5))

C2Ss. 475-481 applied (with modifications) (1.10.2009) by The Unregistered Companies Regulations 2009 (S.I. 2009/2436), regs. 3-5, Sch. 1 para. 11 (with transitional provisions and savings in regs. 7, 9, Sch. 2)

478Companies excluded from small companies exemptionU.K.

A company is not entitled to the exemption conferred by section 477 (small companies) if it was at any time within the financial year in question—

(a)a public company,

(b)a company that—

(i)is an authorised insurance company, a banking company, an e-money issuer, [F4a MiFID investment firm] or a UCITS management company, [F5or]

(ii)carries on insurance market activity, or

[F6(iii)is a scheme funder of a Master Trust scheme within the meanings given by section 39(1) of the Pension Schemes Act 2017 [F7or section 39(1) of the Pension Schemes Act (Northern Ireland) 2021] (interpretation of Part 1), or]

(c)a special register body as defined in section 117(1) of the Trade Union and Labour Relations (Consolidation) Act 1992 (c. 52) or an employers' association as defined in section 122 of that Act or Article 4 of the Industrial Relations (Northern Ireland) Order 1992 (S.I. 1992/807 (N.I. 5)).

Textual Amendments

F4Words in s. 478(b)(i) substituted (1.11.2007) by The Markets in Financial Instruments Directive (Consequential Amendments) Regulations 2007 (S.I. 2007/2932), reg. 3(5)

F5Word in s. 478(b)(i) omitted (E.W.S.) (1.10.2018) by virtue of The Occupational Pension Schemes (Master Trusts) Regulations 2018 (S.I. 2018/1030), regs. 1(2), 30(4)(a)

F6S. 478(b)(iii) inserted (E.W.S.) (1.10.2018) by The Occupational Pension Schemes (Master Trusts) Regulations 2018 (S.I. 2018/1030), regs. 1(2), 30(4)(b)

F7Words in s. 478(b)(iii) inserted (N.I.) (29.9.2023) by The Occupational Pension Schemes (Master Trusts) (No. 2) Regulations (Northern Ireland) 2023 (S.R. 2023/148), regs. 1, 30(4), 33

Modifications etc. (not altering text)

C3Ss. 475-481 applied (with modifications) (1.10.2009) by The Unregistered Companies Regulations 2009 (S.I. 2009/2436), regs. 3-5, Sch. 1 para. 11 (with transitional provisions and savings in regs. 7, 9, Sch. 2)

479Availability of small companies exemption in case of group companyU.K.

(1)A company is not entitled to the exemption conferred by section 477 (small companies) in respect of a financial year during any part of which it was a group company unless—

[F8(a)the group—

(i)qualifies as a small group in relation to that financial year, and

(ii)was not at any time in that year an ineligible group, or]

(b)subsection (3) applies.

(2)F9. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(3)A company is not excluded by subsection (1) if, throughout the whole of the period or periods during the financial year when it was a group company, it was both a subsidiary undertaking and dormant.

(4)In this section—

(a)“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.

(5)For the purposes of this section—

(a)whether a group qualifies as small shall be determined in accordance with section 383 (companies qualifying as small: parent companies);

(b)“ineligible group” has the meaning given by section 384(2) and (3);

(c)F10. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(d)F10. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(e)F10. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(6)The provisions mentioned in subsection (5) apply for the purposes of this section as if all the bodies corporate in the group were companies.

Textual Amendments

F8S. 479(1)(a) substituted (1.10.2012 with application in accordance with reg. 2 of the amending S.I.) by The Companies and Limited Liability Partnerships (Accounts and Audit Exemptions and Change of Accounting Framework) Regulations 2012 (S.I. 2012/2301), regs. 1, 5(a)

F9S. 479(2) omitted (1.10.2012 with application in accordance with reg. 2 of the amending S.I.) by virtue of The Companies and Limited Liability Partnerships (Accounts and Audit Exemptions and Change of Accounting Framework) Regulations 2012 (S.I. 2012/2301), regs. 1, 5(b)

F10S. 479(5)(c)(d)(e) omitted (1.10.2012 with application in accordance with reg. 2 of the amending S.I.) by virtue of The Companies and Limited Liability Partnerships (Accounts and Audit Exemptions and Change of Accounting Framework) Regulations 2012 (S.I. 2012/2301), regs. 1, 5(c)

Modifications etc. (not altering text)

C4Ss. 475-481 applied (with modifications) (1.10.2009) by The Unregistered Companies Regulations 2009 (S.I. 2009/2436), regs. 3-5, Sch. 1 para. 11 (with transitional provisions and savings in regs. 7, 9, Sch. 2)