Paul Beare was recently asked to speak at the UK Department for International Trade based in Melbourne and we have captured the key points in this syndicate of posts to follow.
Setting up in the UK: Entity
UK has a number of different UK legal structures. The decision-making process will vary depending on your objectives for setting up in the UK – such as testing the market or employing staff.
The two entity’s we will discuss below are the most typical setups involving an overseas parent company and associated shareholders:
- A branch
- A limited company
There is a branch that is literally a branch registration in the UK then there is limited company registration.
The two differing aspects between these types are, one is governed by parent company jurisdiction law, the other is governed by UK law. Both are registered with Companies House but the branch is a registration of a foreign company in the UK, the limited company is governed by the law of England and Wales.
The limited company can also be a wholly-owned subsidiary and the distinguishing factor there is, you could have an owner-managed business where for example, your wife could be the 50:50 shareholder, that’s a limited company. OpenPay, for example, has set up a wholly-owned subsidiary in the UK so that the UK entity is totally owned by the parent company.
Then you have an LLP, limited liability partnership, and that partnership is from a tax perspective, those partners are taxed under UK law personally. So, depending on how that structure looks, it is often not the most tax advantageous from a tax optimisation perspective in the UK.
There is a joint venture option also available but if we assume hypothetically that everyone around this table is setting up some sorts of bricks, mortar entity whether it is through a distributor and going over to a physical office or distribution warehouse, I think that’s a good place to start with.
From a limited company/subsidiary, the shareholding can be as low as £1 and you do not need to have a UK resident director in order to have a limited company; you yourselves can be the sole director of that UK company.
From the branch perspective, you do need to have representation and that ought to be based in the UK as well so that is an overseas representative, that’s the official terminology with Companies House.