Setting Up a Business in the UK: The Key Issues for Overseas Firms
The UK remains an excellent place to grow your business but, no matter what the size of your firm, any overseas expansion is likely to incur a lot of management time and costs. Thinking ahead may prove the difference between success and failure. Michelle Waligora of IBB Solicitors' Corporate and Commercial Team writes:
The process of setting up a business in the UK will, at large, be the same whether or not you are a UK resident. There are a handful of trading vehicles to choose from and you should always seek tax advice from a specialist to create the most tax-efficient structure for your purposes. This article focuses on some of the key legal and practical issues relevant when you wish to establish a UK company, but many of the considerations will be just as relevant if you set up any other UK trading vehicle, pursue a joint venture or an agency/distributorship relationship with a third party.
Formation of a company
Over the years it has become reasonably easy to set up a company in the UK and you can now do so within 24 hours, or even on the same day. For the ‘bare bones’ of the company, you will need a company name, a UK registered office address and at least one director and one shareholder (neither needs to be resident in the UK).
Please note that although your existing overseas entity may be a shareholder, only a natural person (i.e. an individual) may serve as a director of the company. You will be able to complete the registration process yourself but there are plenty of formation agents who will incorporate the company for you for a relatively small fee. If you think you require the help of a lawyer, you can contact the UK’s Solicitors Regulation Authority (or a business/commerce association or other body in your desired location), who will be able to recommend a lawyer/law firm to guide you through and advise on the process.
Aside from the legal formalities of setting up a company, there will be plenty of practical and commercial matters you should think about before pursuing your new business venture.
UK laws and customs
If you set up a business in the UK, you will become subject to UK laws. Unless you have previously traded in the UK, you will most likely not be familiar with the legal system, which may or may not be largely different to the one of your home country. You should consider seeking legal support and obtain advice on, amongst others, the laws regulating the supply of goods and services, consumer protections (if you deal in B2C sales), data protection (which are becoming increasingly stricter worldwide), and employment and pensions, as well as any specific regulations relevant to your sector.
You may also find the business customs and culture very different to your home country and you should accustom yourself with any differences, and ensure that any staff who are to work for you in the UK do so too. There will be plenty of organisations which will hold seminars and talks for foreign business owners and investors which may assist with this.
Company and trading name
You should decide under what name you would like to trade in the UK and carry out thorough checks to see whether there is already an existing business using, or operating under, the same name, or a similar name. Not only will you be unable to register a company with a name that has already been registered by another company, but you could put yourself at risk of a trademark infringement or a so called ‘passing off’ claim and end up with an injunction. You can carry out relevant checks with Companies House and the Intellectual Property Office, as well as online search engines.
There may be other questions to ask yourself such as whether the registered/trading name is likely to be well received in the UK? If your existing name is in a foreign language, will you want to translate it into English, and is such a translation going to change the original meaning associated with it? Is there a risk that the name has negative connotations or is offensive? Is the name adequately representative of the product or services you want to introduce to the market?
Once your UK company has been incorporated, you will need to get it up and running. This will involve opening a UK bank account (and your accountant or lawyer should be able to recommend a bank) and, if necessary, finding office space and hiring employees.
If you are considering moving to the UK or thinking of relocating your key staff from your home country, you may need to go through immigration procedures and obtain a visa. Perhaps more importantly, if the success of your UK business is dependent on particular members of staff, have you discussed the opportunities with them and are you confident that they are happy to relocate in the first place?
You should also consider the location from which your office or branch will operate. Is a location in central London (which inevitably means very high commercial rent!) necessary for your operations, or would your business thrive just as well (or better) in a location slightly further away but nevertheless within close proximity to London. There are plenty of high-growth local economies outside of London which can prove an excellent place to run your new business, such as Buckinghamshire, named by some the ‘Entrepreneurial Heart of Britain’ due to the growing number of business start-ups, including those in science and technology. It boasts a vast service-based business community and great transport links to central London and its airports, attracting hundreds of foreign companies to have their European head offices there.
If, on the other hand, you do not require a UK office or staff presence (whether initially or altogether), you should ensure you have arranged for any mail to be forwarded to you so that any important notices sent to the registered office address reach you without delay.
You should consider whether the new company will require any insurance policies to be taken out, for example, employer’s liability insurance.
Whilst you may have been prudent and registered your trademark in your home country, you should check whether the protection offered by such registration extends to the UK. If you have an EU-wide protection, consider the effect of Brexit, after which the UK will cease to be an EU member state. If in doubt, speak to a lawyer or a trademark attorney. Similar considerations will apply to any other intellectual property rights.
All in all, whilst the incorporation of a company itself may be fairly straightforward, the above points will give you a good head-start for when you sit down to prepare a robust business plan for your new venture. Finally, no matter how you choose to enter the UK market, help from a suitably qualified professional will prove invaluable to guide you through what can be an intimidating process, and to assist with some of the more practical matters.
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If you would like advice on how to set up a new business in the UK or relocate your business to the UK, talk to our experienced corporate or commercial solicitors. Call us today on 01895 207264 or email email@example.com.
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