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ICAEW publishes TECH 06/20BL Exemption from audit by parent guarantee

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03 Nov 2020

The Institute of Chartered Accountants in England and Wales (ICAEW) has published TECH 06/20BL Exemption from audit by parent guarantee.

This technical release is an updated version of TECH 07/13BL and provides guidance on eligibility for and application of the provisions in s479A-479C of the Companies Act 2006. These provisions permit subsidiary companies and limited liability partnerships to take an exemption from audit if the parent undertaking guarantees all outstanding liabilities to which the subsidiary is subject at the end of the financial year to which the guarantee relates, until they are satisfied in full.

The revised technical release applies for periods beginning on or after 1 January 2021. It reflects changes to UK law made since the previous version; most notably it reflects changes arising as a result of the UK’s withdrawal from the EU. In particular, for periods commencing on or after IP completion day (defined as 31 December 2020 at 11.00pm UK time), the exemption is only available where the guarantee is given by a parent undertaking that is established under UK law. This represents a narrowing of the availability of the exemption; for periods beginning before IP completion day, the exemption is available where the guarantee is given by a parent undertaking established in the EEA.

The technical release is available on the ICAEW’s website.

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