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Part VIIU.K. Accounts and Audit

Modifications etc. (not altering text)

C1Pt. VII (ss. 221–262) applied with modifications by S.I. 1985/680, regs. 4–6, Sch.

C2Part VII (ss. 221-262) continued by S.I. 1990/355, arts. 6, 7, Sch. 2 para. 13(1)(a)

C3Part VII (ss. 221-262) amended by S.I. 1990/355, arts. 6, 7, Sch. 2 para. 1(2)(5)

C4Part VII (ss. 221-262) extended by S.I. 1990/355, arts. 6, 7, Sch. 2 para. 1(3)(5)

C5Part VII (ss. 221-262) modified by S.I. 1990/355, arts. 6, 7, Sch. 2 paras. 1(4)(5), 3(2)(3)

C6Part VII (ss. 221-262) excluded by S.I. 1990/355, arts. 6, 7, Sch. 2 para. 3(1)(3)

C7Part VII (ss. 221-262) restricted by S.I. 1990/355, arts. 6, 7, Sch. 2 para. 13(1)(b)

Pt. VII (ss. 221-262) applied (with modifications) (21.7.1993) by S.I. 1993/1820, reg. 4, Sch. paras.1, 2 (as amended (1.10.2005) by S.I. 2005/1987, reg. 3)

Pt. VII (ss. 221-262) applied (with modifications) (6.4.2001) by S.I. 2001/1090, reg. 3, Sch. 1 (as amended (4.3.2004) by S.I. 2004/355, art. 8, (1.10.2005) by S.I. 2005/1989, reg. 2, Sch. 1 and (12.1.2006) by S.I. 2005/3442, reg. 2(2)(b), Sch. 2 para. 3(1))

Chapter IIU.K.Exemptions, Exceptions and Special Provisions

[F1 Exemptions from audit for certain categories of small company]U.K.

Textual Amendments

F1Ss. 249A-249E and preceding cross-heading inserted (11.8.1994) by S.I. 1994/1935, reg. 2

F2249B Cases where exemptions not availableE+W+S

(1)[F3Subject to [F4subsections (1A) to (1C)],]A company is not entitled to the exemption conferred by subsection (1) or (2) of section 249A in respect of a financial year if at any time within that year—

(a)it was a public company,

[F5(b)it was a person who had permission under Part 4 of the Financial Services and Markets Act 2000 to carry on a regulated activity,]

[F6(bb)it carried on an insurance market activity,]

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

[F7(d)it was an appointed representative, within the meaning of section 39 of the Financial Services and Markets Act 2000 [F8(other than an appointed representative whose scope of appointment is limited to activities that are not regulated activities for the purposes of this Part: see section 262)] ,]

(e)it was a special register body as defined in section 117(1) of the Trade Union and Labour Relations (Consolidation) Act 1992 or an employers’ association as defined in section 122 of that Act, or

(f)it was a parent company or a subsidiary undertaking.

[F9(1A)A company which, apart from this subsection, would fall within subsection (1)(f) by virtue of its being a subsidiary undertaking for any period within a financial year shall not be treated as so falling if it is dormant (within the meaning of [F10section 249AA]) throughout that period.]

[F11(1B)A company which, apart from this subsection, would fall within subsection (1)(f) by virtue of its being a parent company or a subsidiary undertaking for any period within a financial year, shall not be treated as so falling if throughout that period it was a member of a group meeting the conditions set out in subsection (1C).

(1C)The conditions referred to in subsection (1B) are—

(a)that the group qualifies as a small group, in relation to the financial year within which the period falls, for the purposes of section 249 [F12(or if all bodies corporate in such group were companies, would so qualify)] and is not, and was not at any time within that year, an ineligible group within the meaning of section 248(2),

(b)that the group’s aggregate turnover in that year (calculated in accordance with section 249) is [F13, where the company referred to in subsection (1B) is a charity,] not more than £350,000 net (or £420,000 gross) [F14or, where the company so referred to is not a charity, [F15not more than £5.6 million net (or £6.72 million gross)]], and

(c)that the group’s aggregate balance sheet total for that year (calculated in accordance with section 249) is [F16not more than £2.8 million net (or £3.36 million gross)] ).]

(2)Any member or members holding not less in the aggregate than 10 per cent in nominal value of the company’s issued share capital or any class of it or, if the company does not have a share capital, not less than 10 per cent in number of the members of the company, may, by notice in writing deposited at the registered office of the company during a financial year but not later than one month before the end of that year, require the company to obtain an audit of its accounts for that year

(3)Where a notice has been deposited under subsection (2), the company is not entitled to the exemption conferred by subsection (1) or (2) of section 249A [F17or by subsection (1) of section 249AA] in respect of the financial year to which the notice relates

(4)A company is not entitled to the exemption conferred by subsection (1) or (2) of section 249A [F18or by subsection (1) of section 249AA] unless its balance sheet contains a statement by the directors—

(a)[F19to the effect]that for the year in question the company was entitled to exemption under subsection (1) or (2) F20. . . of section 249A [F21or subsection (1) of section 249AA],

[F22(b)to the effect that members have not required the company to obtain an audit of its accounts for the year in question in accordance with subsection (2) of this section]

(c)[F19to the effect]that the directors acknowledge their responsibilities for—

(i)ensuring that the company keeps accounting records which comply with section 221, and

(ii)preparing accounts which give a true and fair view of the state of affairs of the company as at the end of the financial year and of its profit or loss for the financial year in accordance with the requirements of section 226, and which otherwise comply with the requirements of this Act relating to accounts, so far as applicable to the company.

(5)The statement required by subsection (4) shall appear in the balance sheet [F23above the signature required by section 233] required by section 233 or, as the case may be, above any statement required by section 246(1A) or by paragraph 23 of Schedule 8.

Textual Amendments

F2Ss. 249A-249E and preceding cross-heading inserted (11.8.1994) by S.I. 1994/1935, reg. 2

F3Words in s. 249B(1) inserted (2.2.1996) by S.I. 1996/189, reg. 10(2)

F4Words in s. 249B(1) substituted (15.4.1997) by S.I. 1997/936, reg. 3(2)

F5S. 249B(1)(b) substituted (1.12.2001) by S.I. 2001/3649, arts. 1, 14(1)(2)

F7S. 249B(1)(d) substituted (1.12.2001) by S.I. 2001/3649, arts. 1, 14(1)(4)

F8Words in s. 249B(1)(d) inserted (5.9.2005 with application as mentioned in art. 1(2) of the amending S.I.) by The Companies Act 1985 (Investment Companies and Accounting and Audit Amendments) Regulations 2005 (S.I. 2005/2280), reg. 16

F9S. 249B(1A) inserted (2.2.1996) by S.I. 1996/189, reg. 10(3)

F10Words in s. 249B(1A) substituted (26.5.2000 with application as mentioned in art. 1(2) of the amending S.I.) by S.I. 2000/1430, arts. 1(2), 4(1)(2)

F11S. 249B(1C)(1D) inserted (15.4.1997) by S.I. 1997/936, reg. 3(3)

F12Words in s. 249B(1C)(a) inserted (26.5.2000 with application as mentioned in art. 1(2) of the amending S.I.) by S.I. 2000/1430, arts. 1(2), 4(1)(3)(a)

F13Words in s. 249B(1C)(b) inserted (26.5.2000 with application as mentioned in art. 1(2) of the amending S.I.) by S.I. 2000/1430, arts. 1(2), 4(1)(3)(b)(i)

F14Words in s. 249B(1C)(b) inserted (26.5.2000 with application as mentioned in art. 1(2) of the amending S.I.) by S.I. 2000/1430, arts. 1(2), 4(1)(3)(b)(ii)

F17Words in s. 249B(3) inserted (26.5.2000 with application as mentioned in art. 1(2) of the amending S.I.) by S.I. 2000/1430, arts. 1(2), 4(1)(4)

F18Words in s. 249B(4) inserted (26.5.2000 with application as mentioned in art. 1(2) of the amending S.I.) by S.I. 2000/1430, arts. 1(2), 4(1)(5)(a)

F19Words in s. 249B(4)(a)-(c) inserted (2.2.1996) by S.I. 1996/189, reg. 10(4)

F20Words in s. 249B(4)(a) omitted (26.5.2000 with application as mentioned in art. 1(2) of the amending S.I.) by virtue of S.I. 2000/1430, arts. 1(2), 4(1)(5)(b)

F21Words in s. 249B(4)(a) inserted (26.5.2000 with application as mentioned in art. 1(2) of the amending S.I.) by S.I. 2000/1430, arts. 1(2), 4(1)(5)(b)

F22S. 249B(4)(b) substituted (26.5.2000 with application as mentioned in art. 1(2) of the amending S.I.) by S.I. 2000/1430, arts. 1(2), 4(1)(5)(c)

F23Words in s. 249B(5) substituted (2.2.1996) by S.I. 1996/189, reg. 10(5)