The main disadvantages for a potential UK subsidiary are based around statutory compliance:
- Annual accounts must comply with the requirements of the 2006 Companies Act. In most cases, a statutory audit is not required for companies with an annual turnover of £6.5 million or less.
- A company’s accounts must be filed on public view with the Registrar of Companies at Companies House. A Confirmation Statement must also be submitted to the Registrar of Companies together with a filing fee of £30 (£15 if filed online).
- A company must file a corporation tax return.
Other potential disadvantages of a UK subsidiary include:
- Companies pay tax on capital gains at their corporation tax rate (20% for profits up to £300,000). In a company, a capital gain is reflected in the value of its shares and if these are sold a “double charge” to capital gains tax can arise. This may be avoided if assets that are likely to increase in value are owned either outside the company or within a self-administered pension scheme, or if a company is sold complete with its assets.
- Closure of a Ltd company takes a minimum of three months, due to the notice period required and associated filing – this is the minimum providing there are no objections to the strike off.