Question:
I have a query to do with establishing a UK subsidiary for an Irish company
What the client wants is:
Costs involved in establishing a UK subsidiary and the shareholder will be Irish company?
Can Irish company lend to UK company?
Do consolidated accounts come in to equation and reporting responsibilities (turnover of Irish 2m and assets 400k and UK nothing)?
Registration for taxes is that something you provide?
Answer:
Yes and Irish Company can loan to a UK Company. Intercompany loans are permitted under Section 243. We note that the illegal loan provision in Section 239 CA have no application where Section 243 CA 2014 applies – this states Section 239 does not prohibit the making a loan or quasi-loan to any body corporate which is its holding company, subsidiary or a subsidiary of its holding company. Section 8(1) CA 2014 provides the definition of a holding company for the purposes of CA 2014. It states ‘For the purposes of this Act, a company is another company’s holding company if, but only if, that other is its subsidiary.’ Definitions for subsidiary can be found in Section 7 CA2014.
With regards the consolidated accounts, Audit Exemption applies to any group company if the group as a whole qualifies as a Small Group. The entire group and all its subsidiary undertakings must, taken as a whole, satisfy two of the following 3 conditions in order to claim a Group Company Audit Exemption (small group company audit exemption (s359 CA 2014). The same criteria would apply to assess whether consolidated accounts would be required.
Where a group accounts meets 2 of the following in respect of that year and the prior year (two consecutive years)
• Employees not exceeding 50
• Turnover not exceeding €12m net or €14.4m gross.
• Total Assets not exceeding €6m net or €7.2m gross
It must exceeded in two consecutive years before entity ceases to be a Small Group.
(Net means after set-offs & other adjustments made to eliminate group transactions. Gross means without those set-offs and other adjustments. Can be met on either a net or gross basis)