Setting up shop in the UK — Exporter Magazine
When a business looks to expand and branch out into other countries it is essential to be fully aware of all the fiscal/taxation responsibilities in that country. Businesses which are already established outside the UK, but who wish to have a permanent presence in the country, are required by law to have a formal establishment. This can be achieved in a number of ways including: registering a branch office in the UK; incorporating a new UK company; buying an existing UK company or; employing an agent to act on your behalf and thereby establishing a ‘brass plate’ presence.You can set up a private limited company to run your business in the UK. However, all limited companies must be registered (incorporated) with Companies House. To do this you will need the following:• The company’s name and registered address. The registered office address is where official communications are sent – for example, letters from Companies House and HM Revenue & Customs. The address doesn’t have to be where you operate your business from but it must be a physical address and in the same country that your company is registered in. You can use your home address or the address of the person who will manage your Corporation Tax if these addresses meet the rules above.• At least one director. You must appoint people to run the company (called ‘directors’).• At least one shareholder.• Details of the company’s shares. Known as ‘memorandum of association’.
• Rules about how the company is run. Known as ‘articles of association’. When you register your company you must have articles of association. These are the rules about running the company that shareholders and ‘officers’ (directors or company secretary) have to agree to. For example, rules about how decisions that affect the company must be made and the role of shareholders in those decisions. Most companies use standard (‘model’) articles, but you can change these or write your own as long as the company doesn’t break the law.
You can register a company: online, but only if the company is limited by shares and uses model articles of association; by post using form IN01 – you must do this if you change the model articles or use your own; or by using an agent.Once the company is registered you’ll get a ‘Certificate of Incorporation,’ – this confirms the company legally exists and shows the company number and date of formation.
In addition to formally establishing a presence in the UK, consideration must be given to the many practical issues before trading in the UK can commence, such as: immigration matters; employment issues; property matters; trading contracts; and fiscal responsibilities (taxation).
TaxationThere are a number of taxes which a company may be subject to whilst trading in the UK. These include:• Value Added Tax (Vat) – An indirect taxation aimed at the end user/consumer. A transaction based, cascade tax on goods and services provided in the UK charged by businesses who register for Vat on the basis of them exceeding the Vat turnover threshold (currently £77K). The Vat-registered business charges Vat on its supplies of goods and services and reclaims the Vat it incurs on its own purchases. These amounts are paid/reclaimed on quarterly Vat returns. Ultimately the Vat burden is with the end consumer.• Income Tax – A direct tax on earnings (as an employee), profits (on self employed) pensions, savings and investments.• Corporation Tax – Tax on company profits.• Import Duty – Duty levied on goods imported from outside the EU.• Excise Duty – Duty levied on alcohol and tobacco products.• Fuel Duty – Duty levied on petrol, diesel and LPG.• Stamp Duty – Duty applied when buying property or shares.• Local Services – Council Tax provides for local services like road maintenance, refuse collections etc.• Others – General Betting Duty, Inheritance Tax and Capital Gains.
The majority of the taxes mentioned above are administered by Her Majesty’s Revenue & Customs (HMRC)
Setting up your company for Corporation TaxWithin three months of starting up in business, you must give HMRC specific information about your company. HMRC will use this information to work out when your company must pay Corporation Tax. Any business activity counts as starting up – for example buying, selling, employing someone, advertising or renting a property.You must tell HMRC the date you started in business; your company name and registered number; the main address where you do business from; what kind of business you do; the date you’ll make your annual accounts up to; and whether you’ve taken over a business or you’re part of a group.
You can do this once you’ve got your company’s Unique Taxpayer Reference (UTR). HMRC will send your company’s UTR to your registered office address, usually within a few days of the company being registered (incorporated), along with details on the information HMRC needs about your company and how to set up your company’s HMRC online account for Company Tax Returns and Corporation Tax.
Agency agreementsA cost effective mechanism for a business in one country to conduct their business activities in another, without significant investment, risk, or without the need to establish a permanent place of business, is to appoint an agent.Obviously the burden of fulfilling all of the fiscal responsibilities required in setting up a business in the UK can be a daunting prospect, especially at arms length with the distance between the two countries.We have many years experience in dealing with the UK tax authorities and you can be assured of a first class professional service when we act as your fiscal agent. We can fulfil all of the above services and more, by not only acting as you fiscal agent within the UK but also as your representative here.Stephen Fennell is director of SEF VAT Consultants, based in Holmfirth, West Yorkshire.
Visit www.sef-vatconsultants.co.uk
Publishing Information
Magazine Issue
Exporter Magazine May/June 2013 issue 28
