Following the World Bank’s recent ranking of the UK as the number one country in the EU and G8 for ease of doing business, the UK is clearly an attractive destination for overseas companies looking to establish a business presence in Europe.
We have outlined below our top ten tips for overseas companies looking to expand their business into the UK:
1. Choose your type of business presence
There are a number of different ways in which overseas companies can establish a business presence in the UK. Often this decision will be driven by a variety of factors (including tax) but some of the options available are:
2. Corporate structure
Depending on the type of business presence chosen, the constitutional/ governance documents of the business should be in place from the start.
This includes, in the event that a limited liability company is incorporated, a set of articles of association and potentially a shareholders agreement to govern the relationship between the company’s shareholders.
If it is the intention to appoint a commercial agent, then the Commercial Agents Regulations 1993 must be considered when drafting the agency agreement.
In the UK, the most common types of interest in real estate are freehold and leasehold.
Companies will need to decide whether they wish to purchase a freehold interest, which means that the property is owned absolutely, or a leasehold interest, which means the company will have restricted use of a property with certain obligations for a limited time.
The decision in respect of premises is likely to be significantly affected by the amount of capital the company has to invest and the amount of time the company wishes to commit to establishing itself in the UK.
Alternatively, short term serviced offices can be rented.
4. Relocation of staff
The ability to require existing employees to relocate will generally depend on the terms of their contract and any local laws which apply where they are currently working.
Immigration law in the UK is a complex area and specific advice should always be sought when considering employing a foreign national in the UK.
5. Employment of new staff
Consideration must be given on how any new workers will be engaged by the company. This can be by way of an employment contract or consultancy agreement but advice should also be sought on the tax implications of each option.
As well as being regulated by the individual employee’s contract of employment, employment in the UK is regulated by a wide range of statutory protection.
Broadly, these protections apply to those employed in the UK, whether they are British or not, and regardless of the law governing their contract of employment. Any contract of employment must comply with the statutory requirements which require certain written particulars, such as, details of hours of work and sickness pay.
Consideration should also be given to whether any employee share / bonus scheme will be put in place to incentivise employees.
6. Corporate tax planning
The principal concerns in the corporate taxation field are to ensure, firstly, that the foreign parent does not become resident in the UK for tax purposes (and it should be noted that under UK tax law, a corporation can be resident in more than one jurisdiction) and, secondly, to isolate, so far as possible, the profits of the parents from the charge to UK tax.
There are also different tax implications depending on which corporate structure the business presence in the UK takes and advice should be sought to make the UK presence as tax compliant and efficient as possible.
7. Intellectual property
There are a number of ways in which intellectual property rights (“IPR”) can be protected in the UK and these depend on the nature of the right in question.
The principal forms of IPR in the UK are copyright, design rights, trade marks and patents. Companies should ensure that their IPR is sufficiently protected and registered, where necessary, in order to protect any exploitation of their IPR.
8. Data protection
It is a requirement that all individuals or corporate entities that control how personal data is processed in the UK comply with the Data Protection Act 1998. Certain exceptions are in place for corporate entities that have an established place of business outside of the UK but within the European Economic Area (“EEA”), however in general terms, the obligations are:
9. Anti-bribery and corruption requirements
The Bribery Act 2010 (the “Act”) came into force in July 2011 and, in laymen’s terms, means that it is now a criminal offence for an individual or a UK organisation to offer, ask for or accept an “inducement” that may be a reward for acting improperly. The Act also covers UK organisations even if their business is conducted outside the UK. An organisation will have a statutory defence if it has put in adequate procedures in place to prevent bribery on its behalf.
Therefore, suitable bribery and anti-corruption policies should be put in place and communicated to all employees at an early stage.
10. Website / Terms and Conditions
If a UK website is to be launched then there are several aspects to this which must be considered, including, terms and conditions, privacy statements, registration of domain names and the new regulations in respect of cookies.
The company’s terms of trade will also need to be produced/ adapted in any event.
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