Legal formations in the UK
Even before you form a UK entity, our expertise can be indispensable. With over 20 years of quality experience as international chartered accountants, we can advise an overseas company on what type of entity to set up in the UK.
If you’re planning to start-up a UK company, you will need detailed advice on which structure is right for your enterprise. Often, this will depend on your objectives and potential exit plan.
We believe every client is unique. Whatever you require, we will put together the ideal team of experts to assist you in taking your business to the next level.
UK establishment of an overseas entity
Your business only requires formal registration in the UK when it has a physical presence in the country, such as a place of business or a branch.
The Companies Act of 2006 governs company law in England and Wales. A foreign company is required to register as an establishment with Companies House within one month of commencing business in the UK.
Once registered, an overseas entity with a permanent establishment in the UK must file certain documents at UK Companies House. General information about the company, including its constituting documents and any accounts, are filed in accordance with the laws of the country in which it is incorporated. When these documents are filed, they become public record.
Establishing a company
There are four types of companies that you can create in the UK:
1. Private company limited by shares
In this case, the members’ liability is limited to the equity they have invested or agreed to invest.
2. Private unlimited company
There is no limit to the members’ liability in the event that the company is wound up.
3. Private company limited by guarantee
This type of company does not have a share capital. The members’ liability is limited to the amount that they have agreed to. This type of company is used principally for charitable organisations and clubs.
4.Public limited company (PLC)
The members' liability is limited to the equity they have invested or agreed to invest. The shares of a PLC can be offered for sale to the general public and be quoted on the stock exchange.
We’ll help you decide which kind of company you should form. This will be informed and determined by your unique circumstances and needs.
How we can help with UK company formation
After consulting with us, you will have a clear idea of what type of entity you would like to set up in the UK.
Once a decision is made we can start working together to make your business a success by.
- Setting up and company registration (setting up a limited company, UK branch, subsidiary or otherwise)
- Establishing a good working relationship with your bank
- Registering your operation for UK Corporation Tax, VAT and PAYE
- Appointing a company secretary - we can appoint ourselves and carry out the statutory company secretarial issues associated with this role
- Setting up an address which can be used as your registered office
Outsourced UK company payroll
Administering a UK payroll and dealing with other human resource (HR) matters can be time consuming. This is made more difficult by complex UK tax and employment legislation. We can provide comprehensive and confidential payroll services as well as advice on HR matters. By doing this, we can help you focus on the core activities of your business.
UK payroll service
Our payroll service includes:
- Customised pay slips
- Monthly or bi-monthly payments
- Administration and payment of other employee benefits
- Payments made electronically to employee bank accounts
- P11D registration and submission.
- Summaries and analyses of staff costs
- Administration of PAYE, National Insurance, statutory sick pay, statutory maternity pay, etc
- Completion of statutory forms, including year-end returns, to issue to your employees and submit to HMRC
Getting P11D dispensation
Employers must use P11D forms to report year-end expenses and benefits for employers who earned £8,500 or more.
To enable the inspector to grant a dispensation you must be able to demonstrate that:
- No tax would be payable by the employees on the expense payments or benefits
- Expense claims are independently checked and authorised within your company
- Each claim is submitted with appropriate receipts
HMRC will need to be certain of reimbursed expenses as well as the method of control used to identify expenses that might be taxable. This is to ensure, among other factors, that if a dispensation was granted, and a taxable payment is made within a category of expense covered by the dispensation, it will be picked up and reported on the relevant employee's P11D form. A dispensation does not mean that the accounting procedures for recording such expenses can be relaxed.
The application must be in writing and may be by letter. Smaller companies may apply using form P11DX, which is accessible on HMRC’s website.
You should give as much detail as possible regarding the kind of expenses paid, the control procedures adopted for authorisation, approval and payment of expenses, as well as a copy of the expenses claim form.
If granted, the dispensation:
- Will be effective from the date granted - so it is worthwhile applying at any point in the tax year
- May cover all employees, a class of employees or certain named individuals only
- Will be reviewed from time to time and may be withdrawn if the conditions are no longer satisfied
UK RTI payroll in for overseas companies
The UK RTI payroll legislation for overseas companies changed the way UK payroll services operated. Information being processed is accurately assigned to each employee, ensuring that the correct amount of employer and employee tax is calculated.
The simpler reporting requirements, along with the abolition of the annual tax return at year end, have made life a little easier for overseas companies in the UK as well as UK-based employers.
RTI was designed to modernise the PAYE process and to support the Universal Credit welfare system. The legislation requires UK companies with employees to tell HMRC about PAYE payments when they are made and not at the end of the tax year.
UK tax advice
For overseas companies operating in the UK, tax can be time-consuming and costly. Our tax department has the expertise and experience to deliver advice and administration for all aspects of UK tax. Below we take a look at the basics of UK VAT and Corporation Tax.
What is UK VAT?
In the UK, VAT is chargeable on taxable supplies produced by taxable persons. Credit for allowable VAT paid to other businesses and the net balance is payable or reclaimable - normally on a quarterly basis. UK VAT paid on purchases and expenses (inputs) is set off against VAT charged on sales (output tax). Only the net difference is paid to the government (i.e. tax on the value added).
In a start-up situation, or when trading as a branch operation and carrying out marketing activities only, there may be expenses but no sales. In this case the input tax can be reclaimed from HMRC, provided the UK entity is VAT registered.
Can I reclaim UK VAT?
Provided that the UK entity is registered for VAT, a business can generally claim the VAT back on its purchases. This is possible where the purchases relating to the goods or services sold are liable for VAT. Some VAT cannot be recovered. VAT in the UK is complicated, and it can be a significant liability for your UK business if it is not properly understood. When our tax advisors initially speak with an overseas company looking to set up in the UK, we discuss their objectives as well as if and when it is appropriate to register for VAT.
UK Corporation Tax
Corporation Tax is charged on the taxable profits of a UK resident company by reference to the total profit from within the accounting period. A UK-based company is liable for UK Corporation Tax on its worldwide profits, including the chargeable gains. The UK corporate tax rate is currently 20%, this will be reduced to 18% in 2020.
When is Corporation Tax due for a UK company?
For small and medium-sized companies (fewer than 250 employees):
- Nine months and one day after the end of the accounting period
For large companies (more than 250 employees) - By instalments:
- The 14th day of the 7th, 10th, 13th and 16th months after the commencement of a 12 month accounting period
- Any balance is due nine months and one day after the end of the accounting period. We are able to prepare computations and file UK Corporation Tax Returns both for a UK branch or subsidiary of an overseas company.
UK company start-up advice
It’s exciting to expand or set up a business in a foreign country and it should be a time for celebration. A trusted partner can help you channel your energy so that you can focus on making your operation succeed. Our UK business migration service can take care of the regulations and administration, and provide you with key start-up advice, so you don’t have to worry about unforeseen circumstances.
Bridging the gap
Many of our international clients attempt to copy their local employment contracts and apply them in the UK. Unfortunately, the UK legal system does not always allow for this. Whatever type of entity you want to set up, our advice will be tailored to your specific circumstances. We understand your concerns and work through them to ensure that your UK setup is as smooth as possible.
Opening a UK business bank account
Most overseas companies trading in the UK will require a UK business bank account to conduct business. Over the last two decades we have built up strong relationships with several banks. Even with our help, the process of setting up an account can be time consuming.
Before setting up a bank account for new customers, UK banks must undertake customer due diligence. This is part of the anti-money laundering (AML) regime and is a key requirement of the Money Laundering Regulations 2007 in the UK. It will usually take about two months to open an account.
Thanks to our experience in helping our clients set up UK bank accounts, we are be able to tell you exactly what kind of information your business will be required to submit to the banks. This will help expedite the process and ensure that your application has the highest chance of success.
As chartered accountants, we are also required to carry out checks on our clients before we can act on their behalf. These “Know Your Client” procedures consist primarily of identifying the client, the source of their funding and the ultimate beneficial owner(s) of the business.
The main UK banks will usually accept the due diligence procedures we perform on our clients’ behalf and, with your permission, we can pass that information onto the chosen bank. This will The main UK banks will usually accept the due diligence procedures we perform on our clients’ behalf and, with your permission, we can pass that information onto the chosen bank. This will reduce the time involved in opening the UK bank account. Until your real account is operational, we provide a temporary Client Trust Account.
Operating your UK bank account
The majority of our clients choose us to operate their electronic banking to make the most of their payments. This service includes payroll payments to the employees and HM Revenue and Customs. Payments can be authorised by the client via email or authority can be delegated to us for routine payments. Many of our clients also choose to appoint us as cheque signatories to facilitate manual payments. This is more efficient and enables us to keep costs down while providing UK support to your team whether based here or overseas.
UK HR outsourcing services
Beyond calculating and making UK payroll payments, there are often complex and sensitive employment matters that must be dealt with. These often require trained human resource experts. Our team has the expertise to deal with such matters on your behalf.
We are able to:
- Review contracts for overseas employees and seek expert legal advice when necessary
- Advise on and administer employee benefit packages including incentive schemes, bonuses and ex-gratia payments
- Administer pension schemes – these are mandatory for companies employing five or more people
- Help set up employee insurance schemes, including life, medical and critical health insurance
- Administer employee stock options
- Deal with the legal requirements and administration of termination payments
- Advise on alternatives to employment at will in the UK