How to Grow a Global Business: Advantages of Registering a UK Company

In recent years, a lot of new promising businesses have been set up, from small cafes and restaurants with creative concepts to large high-tech producers. The COVID-19 pandemic has hit economies hard, but we all know that what does not kill you makes you stronger.

Many entrepreneurs have successfully adapted to the new economic conditions and even seen additional opportunities for business development. Such flexibility can help deal with force-majeure events and volatility. For example, when your company enters an international market.

There are a few factors to consider when choosing where to register a subsidiary. This article describes in detail how to expand your business to the United Kingdom which is one of the most resilient and sought-after economies.

Global Business Base: Why the United Kingdom?

Where you will open a subsidiary for developing your global presence depends, first, on where your potential clients, partners and suppliers are based. Second, you must assess the size of the market and the quality of the infrastructure. The USA, the EU, the UK and some Asian countries rank among the most favourable candidates.

And the UK stands in that list due to several criteria:

1. High profile
   The British Isles built their economic reputation as British Empire, and since then, it has only been growing. A UK company is an example of reliability and stability which makes it a great tool to promote goods and services and resolve business-related issues.
2. Rule of law
   The United Kingdom provides a safe environment not only for entrepreneurs but also for their clients. British legislation is transparent and straightforward, and laws are enforced no matter what the vested interests of government officials are.
3. Stable economy
   It was almost unaffected by Brexit, the pandemic and other major world crises. Such economic conditions guarantee that most of the time a UK-registered company will stay resilient to and protected from force-majeure events.
4. Favourable taxation
   The UK, just like any EU country, persecutes tax avoidance. However, there are legal tools for tax optimisation and entrepreneurs make constant use of them.

The list of arguments in favour of opening a UK subsidiary is not exhaustive. But even the ones mentioned above show that you will benefit from entering the global market in the UK.

What Do I Need to Register a Company in the UK?

You do not have to be a UK resident to register a legal entity in the UK; foreigners are allowed to set up UK companies. And even your presence in the UK will not be required. Instead, you can submit all the documents online through an authorised representative. It usually takes one to five days to register a company in the UK. A more complicated case might take several weeks.

An application is submitted online. You can complete it yourself with the help of the corresponding guidance, but it is better to contact trustworthy agents who know how to fill in all forms and provide correct information. Besides, you might want to use their add-on services, such as opening a bank account, getting a postal address, bookkeeping and/or accounting, etc.

What Incorporation Structure Should I Choose for a UK Subsidiary?

To enter an international market, working out a general strategy is a must but all the technicalities of running a business are equally important. The latter includes an incorporation structure of the future company as it will have a significant impact on how it will operate.

• Limited Liability Company (Ltd, Limited) – can be registered by one person who will act both as a sole shareholder and a director of the limited company.
• Limited Liability Partnership (LLP) – requires at least two owners and at least two designated partners who will be responsible for correct and timely reporting.
• Limited Partnership (LP) – requires one general and several limited partners. Only a general partner is liable for any liabilities and debts of the partnership.
• Public Limited Company (PLC) – has strict requirements for share capital and registration process that is nevertheless justifiable in some cases.

The incorporation structure dictates what taxes you will have to pay and what reports will have to be sent to HMRC (UK’s taxation authority). According to statistics, foreign entrepreneurs usually register an Ltd.

How to Choose a Company Name

First and foremost, your company name must be unique, i.e. not used before. You can check it in the official register with all the UK company names. Plus, any name of a legal entity must reflect its incorporation structure at the end – Ltd, LP, LLP, or PLC.

Important to note: it is forbidden to use some words in a company name, such as “royal”, “national”, “empire”, “crown” or similar ones. The name must not be offensive either.

Incorporation Documents

To register a company in the UK, you need two incorporation documents: Articles of Association and a Memorandum of Association. You also must fill in a form to declare persons with significant control and the registered address.

Articles of Association of a Company

Articles of Association is a company’s constitution that defines company directors and share capital. They also cover issuing of shares and share distribution. Articles of Association of a Company are usually based on a standard template provided for each incorporation structure.

The document may also stipulate the conditions under which certain provisions can be amended or become void. In most cases, any amendment requires either a unanimous decision from all company directors, a corresponding court ruling or an official order.

You must notify the Companies House about all the changes within 15 days. Otherwise, you will be fined £200.

Memorandum of Association

Memorandum of Association describes the company’s activities and goals. There is also a template for it. Any changes must be notified to the Companies House.

Application to Register a Company

Registration application contains basic information, including:

1. Company name;
2. Location and address;
3. Shareholders’ liabilities;
4. Incorporation structure: private or public;
5. Initial capital (if any);
6. Initial share distribution (if any);
7. Information about director(s);
8. Information about a company secretary;
9. Information about beneficiaries.

If all the documents and information are validated, the Companies House will issue a certificate of registration with the company name, registration number and other details.

Once the company is registered, it must abide by British law. Directors and company secretaries automatically become liable for fulfilling their duties. This is when you officially enter the global market.

Opening a Bank Account

British banks are very cautious in dealings with foreign nationals. It is practically impossible to open a personal or corporate bank account if you are not a UK resident.

If you need a British bank account, get in touch with a specialist agent who knows how British banks work and what their requirements are. This increases your chances to have a UK bank account. You must also keep in mind that to open a corporate bank account, a bank will require the presence of all the directors and general partners.

British banks have different requirements as to which documents are needed to open an account. In most cases, the list of documents looks like this:

• Incorporation documents;
• Description of the company’s activities;
• Description of potential transactions – type, currency, country of origin, recipients, etc;
• Personal documents of directors, shareholders, and beneficiaries.

Applicants and their businesses must go through due diligence checks. Once an account is opened, if any transaction looks suspicious, the bank might request additional documents.

Who Is a Company Secretary and What Is Their Role?

A secretary in a UK company is not an office manager or an administrative assistant. In the UK, company secretaries are responsible for reporting and liaising with government bodies. Their role is more of a role of a chief accountant. Keep this in mind when you plan to register a UK company.

Here are a few responsibilities of a company secretary:

• Maintain registers and do minutes;
• Prepare and submit accounts and tax returns;
• Notify the authorities about changes in incorporation documents;
• Notify shareholders of the company’s financial state;
• Organise and hold shareholders’ and board meetings.

In some aspects, company secretaries and directors have similar functions, but their liability differs. It is the director who is liable for everything if something happens.

The same person can be both a company secretary and a director. A shareholder can also become a secretary. The company may even contract another company to act as its secretary. Only auditors can under no circumstances perform this function.

What Is Included in Reporting?

It’s not enough to just get a certificate of registration; you must do bookkeeping and prepare and file all the accounts and returns on time to avoid fines and even being struck off the register. Here is what a UK company must file:

• Confirmation statement – to notify the Companies House of any changes in directors, shareholders, partners, and company addresses. The first statement must be submitted 12 months after the company registration.
• Financial accounts – must be submitted to HMRC within nine months after the end of the financial year. It must report on the company’s worldwide activities. Accounts must be filed even if the company has received any revenue in the UK.
• PAYE reports – are required only if a company employs staff. PAYE reports must be filed monthly to report employees’ payments and deductions.
• VAT reports – are filed if a company is registered for value-added tax (VAT). The company must register for VAT if its taxable turnover in 12 months is more than £85,000. Usually, they must be submitted quarterly, but the HMRC may choose to set another schedule.

Taxation in the UK

Now we will talk about one of the main reasons why entrepreneurs choose to register a UK company to enter the international market. British taxation system allows to minimise the tax burden. The UK is even called an offshore sometimes, but this is not correct.

A traditional offshore offers almost zero-tax rates. The UK, on the other hand, has taxes and rather high ones. The taxation system is, however, flexible enough to provide the opportunity to optimise the costs of running an international business.

The main UK taxes include:

• Corporation tax – 19%;
• VAT – 20%, or 15% for some industries;
• Income tax – 20% to 45%;
• Social contributions – 15,7%.

It was mentioned above that you must carefully choose an incorporation structure for your company. It affects how the company operates and pays taxes.

A limited liability company (Ltd) must pay corporation tax and submit tax returns including all its worldwide income.

A limited partnership (LP) and a limited liability partnership (LLP) are not liable for income or corporation taxes. It is partners who are liable to report their income by submitting self-assessment tax returns. If partners are non-UK tax residents and earn their money abroad, they must report it in the country of tax residence.

Any delays in reporting or payments are criminal offences that are punished by hefty fines that depend on the company type and the delay period.

Can I Relocate to the UK by Opening a UK Company?

Registration of a UK subsidiary primarily serves as a means to expand your business internationally. However, you can use this opportunity to relocate to the UK as well.

A company registration itself does not give the right to live in the country. But if an entrepreneur wants to develop business in the UK further, they can apply for a business visa. Here are the available options:

Starting a global business is a serious decision and must not be taken lightly. It requires a lot of preparation such as analysing corporate and tax laws of the given country. If you do not trust your judgement, it is better to contact specialist advisors who will not only help you register a UK company but also provide further business support.