Archive for April, 2011

Taxation matters are dealt with by Her Majesty’s Revenue & Customs (HMRC). There are thousands of pages of tax legislation, but no general anti-avoidance rules. There is generally no system of prior clearance regarding the tax treatment of a particular event or procedure, although there are telephone help lines that can provide verbal advice. However, unless given in writing the advice may not actually be honoured by them! The normal procedure is that tax returns are submitted, and are then subject to checks.

There are a large number of different taxes in the UK, but this note concentrates on the three main ones that a UK business is exposed to.

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For overseas companies the main choices are between a UK Subsidiary or a UK Branch.

A Subsidiary is a company in its own right and requires the establishment of a UK registered company. Most foreign companies set up a ‘private limited company’ that becomes a subsidiary of the foreign parent company. A company can be registered within a few days, if standard documentation is used. The subsidiary can be an immigration sponsor enabling it to obtain work permits meaning that key personnel can be sent from the home country to work in the UK on a regular basis. It will file its own accounts, although the content depends on the size of the group. Those accounts must be audited by a UK firm of accountants.

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The needs of your staff and your business model are the main drivers on this decision.

Your first hire may be key initially and a business could be built around that person, which can dictate the location. Using a managed office service, or a virtual office, could be useful until such time as the business becomes established. (more…)