If you do business in the UK, including in England and Wales, you may be wondering when you must formally register or incorporate your foreign business in the UK. This article will explain what these obligations are and the practical and commercial implications of both.<\/p>\n\n\n\n
Overseas company registration and incorporation refer to two different processes. <\/p>\n\n\n\n
Registration is where you file certain documents with Companies House, which is the public body that governs companies and other business structures. However, you only have to register if you have a physical establishment in the UK.<\/p>\n\n\n\n
The law defines an establishment as a place where you routinely conduct business, or someone else can contact your business.<\/p>\n<\/div>\n\n\n\n
If you have an office you work out of in the UK, this likely constitutes an establishment<\/a>. However, if you visit the UK a couple of times a year and stay at the same hotel, even if you meet clients or work in the hotel, this is unlikely to constitute a business.<\/p>\n\n\n\n Only companies and certain other incorporated businesses are capable of being registered. If you run your business as an unincorporated partnership or sole trader, you do not have to bother registering your business with Companies House. <\/p>\n\n\n\n Incorporation<\/a> is a more stringent process where you create a new company governed by the laws of England and Wales. Unlike registration, incorporation will create a new legal entity with its tax obligations to HM Revenue & Customs. Any profit this entity declares will be subject to the corporate tax rate, which is currently 19%. <\/p>\n\n\n\n You do not need to be a British citizen or even have any right of residence to incorporate a business in the UK.<\/p>\n<\/div>\n\n\n\n As an alternative to incorporation, you could purchase a shelf company<\/a>. A shelf company is a pre-made company that entitles its owner to trade through it. However, the ultimate effect is the same: your business will operate as its legal entity in the UK and be subject to UK laws. <\/p>\n\n\n\n There are not many benefits to registering your company in the UK. Instead, registration is more of a procedural formality. However, registration is something that you are required to do in certain instances. Therefore, if you do not register your business when you are supposed to, you can face penalties such as fines. <\/p>\n\n\n\n On the other hand, while incorporating a business subjects you to UK tax obligations and will increase the administrative burden on your business, it has some advantages. Having your operations in the UK structured through one incorporated company will effectively ring-fence your liabilities in England and Wales to just the assets held by the English company. <\/p>\n\n\n\n For instance, suppose your business is incorporated initially in the Netherlands as DutchCo BV. You then create a new company incorporated in the UK called DutchCo (England) Ltd. Upon incorporation, DutchCo BV would be the shareholder of all of DuctCo (England) Ltd.\u2019s shares.<\/p>\n \n DutchCo Ltd may have \u00a31m assets, but you will only use \u00a310,000 for your English assets. So if you just trade in the UK directly through your Dutch company, incorporating your English operations into a subsidiary company means only \u00a310,000 is at risk if something happens (such as a lawsuit).<\/p>\n <\/p>\n<\/div>\n\n\n\n Having your operations structured through an incorporated company can also allow your business to attain legitimacy. For example, say you want to open a bank account in the UK. In this instance, you may find it easier to have a UK-incorporated company. Likewise, your customers and suppliers may prefer to do business with a UK company. <\/p>\n\n\n\n\n\n Continue reading this article below the form\n <\/i>\n<\/a>\nIncorporation <\/h3>\n\n\n\n
Which Process is Best for My Business?<\/h2>\n\n\n\n