Setting up a UK subsidiary company can present many benefits to an international organisation.

Operate as a local sales platform providing greater confidence to UK and European clients

Incentivise UK staff with shares in the UK company, but not the rest of the business

Generally allows easier operations in the UK rather than going through a non-UK company

Tax and regulatory benefits

‘Ring fence’ the UK business, helping to protect the overseas parent from liability.

Subsidiary vs Branch?

 

Find out the difference and which is right for you.

Services for overseas clients

Find out how we help overseas clients

Setting up a UK subsidiary?

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UK Subsidiary Formation and Management

Elemental offers a broad range of services for setting up and managing a UK subsidiary.

UK Subsidiary Formation

Combining the speed of a digital formation service, with expert help each step of the way. We form all types of UK subsidiary companies.

UK Subsidiary Compliance

All UK subsidiaries require a registered office. Our comprehensive service includes a central London address and access to a digital mailroom, as standard.

Director Duties

We provide a professional UK director service for subsidiaries and we can also support your existing directors to identify and meet their directors’ duties under UK law.

Regulatory

Legal Requirements

Our team has worked at the highest level in the City of London and provide a range of relevant subsidiary legal support, including articles of association and shareholders’ agreements.

Subsidiary Accounting

Accounts preparation book-keeping services provided by qualified accountants. Where you have an existing accountant in your home country, we can work with them to feed the figures into your group reporting.

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UK Subsidiary Tax

Our experts offer a full range of subsidiary tax advisory services, including pre-incorporation structuring, reorganisations and refinancing; advising on corporate residency issues and the applicability of double tax treaties.

Subsidiary VAT

We can support you with deciding whether to register for VAT and manage the process for you with HMRC.

Subsidiary Employees

We can help you to hire your first employees, contracts, payroll, and pensions.

How to Setup a UK Subsidiary

Elemental has an in-house team of company secretaries, lawyers, accountants and tax experts. Below our team outline some of the most common considerations for setting up a UK subsidiary company. The below assumes the subsidiary will be incorporated as a private limited company, the most common form.

1. Subsidiary formation

A key distinction between a UK subsidiary and UK branch is that a subsidiary is incorporated in the UK, whereas a Branch is simply registered in the UK as an overseas entity. To learn more about the differences between a Branch and a Subsidiary, see our guide.

The articles of association are an important document for the subsidiary and sets out the relationship between the shareholders and the company. For a wholly-owned subsidiary, this can be key as it sets out the ability of the parent company to make changes to the company if they are not satisfied with the directors.

There are three types:

  1. Model Articles: prescribed by the government. The content is standard and well known therefore often the easiest to apply.
  2. Standard articles: Model Articles take a simplistic approach in many areas and some people choose to adopt a more full form. These often include more sophisticated provisions and cover more detail. Elemental uses a set of standard in-house articles offered free of charge to incorporation clients.
  3. Bespoke articles: common when a company has multiple shareholders who wish to clearly set out their rights and obligations. In these instances, it is also common for the shareholders to also enter into a shareholders’ agreement.

Consideration should also be given to the share structure of the UK subsidiary and the directors of the subsidiary (see Corporation Tax for some of the tax implications of director residency).

2.Statutory compliance (Company Secretarial)

The statutory compliance regime for UK corporates is relatively pragmatic when compared to other European regimes. However, as with any country, it is important that the basic statutory requirements are met. Doing so helps protect the company and the directors from fines, civil and even criminal proceedings. Companies House has the power to strike a company off the register for failing to meet its obligations and the owners of the company are determined by the company’s statutory registers, so these are vitally important.

Tra gli altri requisiti (compresi quelli elencati in questa guida), tutte le società del Regno Unito sono tenute a rispettare le normative in tre aree:

  • tenuta dei registri legali della società;
  • rispetto del Companies Act 2006; e
  • presentazione di determinati documenti a Companies House.

For further information on these and other duties falling on the company secretary, please see our guide to the Role of a Company Secretary.
I servizi di segreteria aziendaledi Elemental CoSec, incluso il nostro pacchetto di compliance annuale possono fornire assistenza in queste funzioni

3. Conflicts of interest

Tutti gli amministratori delle società britanniche sono soggetti alle norme relative ai conflitti di interesse. Queste includono:

  • the duty to avoid a situation in which a director has, or can have, a direct or indirect interest that conflicts, or          possibly may conflict, with the interests of the company (section 175 Companies Act 2006); and
  • il dovere di dichiarare un interesse in una transazione o accordo proposto con la società (sezione 177 Companies Act 2006).

These duties are particularly relevant for directors of a UK subsidiary. As directors, they are required to act in the best interests of the UK company and not just the group as a whole. They are therefore required to manage these conflicts of interest or they could be in breach of their legal obligations.
I conflitti di interesse possono essere gestiti in vari modi, compresa l'approvazione da parte di amministratori indipendenti e da parte degli azionisti, sebbene ciò dipenda dalle disposizioni statutarie.

For further information, please see our guide on directors’ duties.

4. Legal requirements

Setting up a subsidiary in a new country brings about a host of regulatory and legal requirements, some of which are generic to all businesses in the jurisdiction, and some of which are industry-specific.

In the UK, this can include such matters as compliance with:

  • data protection legislation
  • anti-bribery rules to commercial contracting
  • anti-facilitation of tax evasion

These rules are varied and should be considered carefully by the directors of the company. Elemental’s commercial legal services can assist with this by helping to draft policies and contracts as and when needed and by providing guidance and advice.

5. Accounting

Ogni società del Regno Unito (indipendentemente dal fatto che sia attiva o meno) è tenuta a tenere registrazioni contabili sufficienti per:

  • mostrare e spiegare le transazioni della società;
  • dichiarare con ragionevole accuratezza, in qualsiasi momento, la situazione finanziaria della società in quel momento; e
  • garantire che la contabilità sia conforme ai requisiti del Companies Act 2006 e, se inerente, IFRS.

It is a criminal offence for every officer of the company if these requirements are not met. In any event, it is generally good business practice to maintain these records. Sometimes these records are maintained by a central function overseas in which case accounts and returns relating to the UK business must be sent to the UK not less than every six months.

UK trading companies are required to file accounts each year with Companies
House and HM Revenue & Customs, as well as a Corporation Tax return. The
specific requirements for these documents, and whether they need to be audited, depends on the size and revenue of the company.
In particolare, le registrazioni contabili devono contenere:

  • registrazione delle somme di denaro ricevute e spese dalla società quotidianamente e delle causali di tali incassi e spese; e
  • registrazione delle attività e delle passività della società.

Se l'attività della società prevede la compravendita di merci, le registrazioni contabili devono contenere:

  • bilancio di magazzino alla fine di ogni esercizio sociale;
  • rendiconti di magazzino; e
  • dichiarazione di tutti i beni venduti e acquistati, ad eccezione del commercio al dettaglio, con annesso elenco delle merci, gli acquirenti e i venditori.

(Sezione 386 Companies Act 2006)

I servizi di contabilità e assistenza fiscale di Elemental CoSec possono aiutare con il compimento di questi obblighi, mantendo e preparando la contabilità nella sua interezza o insieme alla funzione di contabilità centrale dell'azienda.

6. Corporation tax

The tax residency of a UK subsidiary will need to be determined before its tax position can be evaluated. If the directors are resident in the UK and make their decisions in the UK, then it is likely that the company will be tax resident in the UK. However, if decisions are, in reality, taken by the overseas parent company, or if the directors run the company from abroad, then the company may be tax resident overseas.

This is a complex area and professional advice should be sought if you are in any doubt. Elemental CoSec offers UK resident directors and tax domiciliation services per SPV e holding britanniche.

Assuming the company is UK tax resident, then it will be taxed in the UK on its worldwide profits. UK corporation tax is charged on tax-adjusted accounting profits.Transfer pricing rules apply to UK resident companies, whereby transactions with related parties (such as the parent company) must be recognised for tax purposes at an arms’ length value (being the amount that a third party would have paid for the goods or services). Though there are certain exemptions for small and medium-sized groups.

Se una società del Regno Unito paga degli interessi o royalties a un destinatario estero, potrebbe essere necessario imporre una ritenuta di imposta e versarla a HM Revenue & Customs. La ritenuta va rivista in base a eventuali convenzioni sulla doppia imposizione che potrebbero essere in vigore tra il Regno Unito e il luogo di residenza del beneficiario.

I servizi di contabilità e assistenza fiscale can assist with these issues.

7. Value added tax (VAT)

Il Regno Unito applica una forma di imposta sulle vendite chiamata VAT e l'aliquota standard è attualmente del 20% (dal 4 gennaio 2011), sebbene ci siano varie eccezioni e aliquote ridotte.

If the subsidiary is trading in the UK and meets the relevant threshold, the company is required to register for VAT. You can also register voluntarily for VAT, which companies generally choose to do because it can allow them to reclaim VAT on their expenses and because it projects a professional image to their customers or clients.

Attualmente, la soglia per la registrazione VAT è un fatturato nel Regno Unito di £85.000 nei 12 mesi precedenti o un'aspettativa che la soglia verrà superata nei 30 giorni successivi.
I servizi di contabilità e assistenza fiscale can assist with these issues. Please get in touch for more information.

8. Employees

Un'azienda dovrebbe avere un contratto di lavoro che stabilisca le condizioni principali di impiego con ciascuno dei suoi dipendenti.

Quando un'azienda inizia ad assumere del personale, è tenuta a registrarsi come datore di lavoro presso HM Revenue & Customs e predisporre un sistema di buste paga. Il sistema gestirà gli stipendi dei dipendenti e tratterrà gli ammontari dovuti per l'assicurazione nazionale e l'imposta sul reddito che dovrebbero essere poi trasmessi a HM Revenue & Customs su base mensile o trimestrale.

Il Regno Unito gestisce un sistema di iscrizione automatica per le pensioni che richiede ai datori di lavoro di contribuire automaticamente al regime pensionistico per conto dei propri dipendenti e di iscrivere automaticamente i dipendenti (soggetto a diritti di rinuncia).
I servizi di risorse umane di Elemental CoSec possono aiutare con questi problemi. Contattateci per ulteriori informazioni.

Come Elemental può assistere

Setting up a UK SubsidiaryHow we can help
UK Subsidiary Formation
Annual Compliance
Subsidiary Directors and Conflicts of Interest
Legal Requirements
Contabilità
Corporation Tax
VAT (Sales Tax)
Hiring Employees
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We have been working with Elemental CoSec for the past 5 years, and we've had a fantastic experience. Nick and his team are highly professional and responsive, and they are a key partner to our business in the UK. We highly recommend working with them.”

Alfredo Apéstegui
Manager & Chief Legal Officer, Mesoamerica (working with Ontaria Teachers' Pension Plan).

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Get in touch with us today to see how Elemental can help you with setting up a UK subsidiary company.