If you are considering shifting the operations of your business to the UK, you would be following in the path of many other firms. In fact, the UK leads all other European countries in popularity as a base for European headquarters. This is in large part due to the suitably talented and skilled employment pool and the favourably designed tax system (with the lowest corporation tax rates of any major trading nation).
That said, if your business is thinking of moving to the UK, it will need to take several steps during which many firms could easily stumble. Here are examples of things to consider.
You could start by dipping your toes in the water
Relocating to the UK can require applying for a UK visa, thoroughly learning about the country's tax system (including registering with necessary authorities), and opening a UK business bank account (e.g. to avoid foreign exchange fees). Seeing the necessity of all of this (and more) could understandably daunt you.
Nonetheless, you may deem the numerous hurdles worth overcoming. This could be especially the case if, economically and politically, the situation in your company's current country is not currently favourable.
We have, for example, seen many businesses from South African establish themselves in the UK. Businesses in that country are attracted to the UK due to the shared language and great access to the global economy, due to open borders philosophy and an unparalleled tax treaty network. Furthermore, many such firms can sample those benefits by expanding operations and establishing subsidiaries into the UK rather than completely relocating.
Form a new firm or expand an existing one?
It is possible for your business to register a UK-based branch with which it would be able to operate. This expansion is more technically referred to as registering a UK establishment of an overseas company.
However, one drawback of this move is that your company would need to submit particular documents and details to Companies House - and reviewing these is a process that could last as long as 4 weeks. A branch structure may also come under close scrutiny regarding the mechanism by which UK reportable profits are calculated.
A quicker method is usually through incorporating a new subsidiary company in the UK.
This entity would be legally separate to your existing company, while you usually would have to wait under 24 hours for the process to complete.
Some businesses might also wish to consider the benefits of operating in the UK as a limited liability Partnership (LLP) rather than a company.
Other responsibilities should be heeded
When setting up, a UK business bank account would not be legally necessary, it would however facilitate the tracking of your corporate transactions and a GBP account can help avoid f(x) risk.
You also need to consider where your business should be physically located both in terms of core business activities and any ancilary administrative functions.
Your need to be thoroughly informed about the UK's tax system. For example, where a subsidiary or branch is established in the UK then you will need to give careful consideration to the complex UK rules on transfer pricing. A transfer pricing policy may need to be agreed with your advisers and such a policy would be useful to present to HMRC in the case of enquiry.
HMRC police the UK tax system in an increasing assertive manner. Should you make a mistake in your tax compliance there could be surprising and perhaps even expensive penalties to pay. Here at Frank Hirth, we have tax professionals who can assist you in planning ahead; call us on (0)20 7833 3500 to learn more or to organise a consultation.