Frequently Asked Questions
What are the legal obligations faced by companies in the UK?
There are many, but at the very least, every year all companies registered in the UK must prepare and file their year-end accounts and returns with the UK trade register (Companies House) – even if they haven’t traded in that year. In addition each company must submit a corporation tax return with the tax authorities. It sounds straightforward, but in reality, it can be anything but. We strongly recommend talking to an expert before making any decisions.
What kind of company should I set up?
Most businesses in your situation set up a Limited company, as it doesn’t require any investment capital. At its simplest, the difference between a public and a private limited company is that a public company is allowed to offer its shares on the open market, while a private company isn’t. Talk to us if you’re not sure where you stand.
How long does it take to set up a company in the UK and how soon can it start trading?
To set up a company can be done within a day, providing you have all the relevant information available. Legally, you will then be able to start trading immediately. However, it can take time to set up all the necessary bank accounts, tax registrations, payroll systems, etc. so it may not be as quick and easy as you think.
What do I need in order to open a business bank account in the UK, and how long will it take?
Owing to recent changes in the law – designed to combat money laundering and other illegal activities – opening a business or personal bank account in the UK can take a lot longer than in most other countries. To do so, you will need to provide the originals of a number of official documents, including your passport and certificate of incorporation for your business.
When does the UK financial year begin and end?
In the UK, as far as individuals are concerned, the financial year runs from April 6 to April 5 the following year. However, for companies, it runs from April 1 to March 31 the following year.
What is the rate of income tax in the UK?
At the moment, all UK incomes are subject to a basic rate of tax of 20% on earnings above £6,475 up to £37,400, and a higher rate of 40% on earnings between £37,401 and £150,000. As of 2010, there is now also a 50% rate, payable on earning above £150,000. In addition to income tax, however, both employees and employers are required to pay national insurance (11 or 1% and 12.8% of salary respectively).
It’s quite a complex system, so for a more comprehensive analysis of taxation rates and how they relate to employee benefits, please feel free to contact us.
Can you help me establish a registered address, trading address and phone number in the UK?
Of course. At Goodwille, we are happy to provide the address for your registered office and/or your trading address from either London or Warwick. In addition, we can offer you a phone number for voice or fax communication, as well as a forwarding service to help you deal with your mail and calls as required, ensuring that your UK customers and suppliers remain in close contact with you.
Why should my company consider setting up our subsidiary or new headquarters in the UK?
For most companies looking to expand abroad, the UK offers a range of benefits and advantages, including legal protection for directors and shareholders, a recognised and respected corporate infrastructure, and potential tax efficiencies. It is also relatively easy to form a company in the UK, with a minimum required share capital of just £1, and it provides you with instant access to a large and talented workforce – particularly in London and the surrounding area. But, as with everything in business, to take advantage of the opportunities available, you need to know what you’re doing.
Do I need to register to pay VAT (Value Added Tax)?
You will need to register for VAT (the UK sales tax) if your turnover of VAT taxable goods and services supplied within the UK for the previous 12 months is more than the current registration threshold of £79,000; or if you expect it to go over that figure in the next 30 days alone.
How long does it take to register for VAT?
It currently takes around a month for HM Revenue & Customs (HMRC) to process applications for VAT registration, although it can take longer if they need to carry out additional checks.
When should I start accounting for VAT?
You must account for VAT from the date on which you were required to register, even if you have not received your VAT registration number and certificate.
Can I reclaim VAT on goods and services I purchased before VAT registration?
As long as you have the appropriate VAT invoices and receipts, you can reclaim the VAT you have paid on certain goods as long as they were purchased for your business in the three years prior to VAT registration and certain services as long as they were purchase within the last six months. If you’re in any doubt about anything to do with paying and reclaiming VAT, please don’t hesitate to give us a call, or to visit the HM Revenue & Customs (HMRC) website.
When should I submit my VAT return?
Most companies submit their VAT return to HM Revenue & Customs every three months. However, other arrangement do exist that may well suit you better.
What do I do if I no longer need my UK company?
There are a number of options available to you:
Close down – Whether you do this or not will mainly depend on the status of the assets and liabilities of the company, but provided it is solvent you can apply to the UK trade register to have the company struck off and dissolved, or to appoint a Liquidator. Remain dormant – If you only need it to hold an asset such as a trademark or a name, or if you think you may wish to start trading again sometime in the future, you can choose to ‘mothball’ your company – keeping it in a dormant state while maintaining its existence. At Goodwille, we offer a fixed-fee service for managing dormant companies. Sell – If you wish to sell your company, we can help you to prepare the necessary paperwork, including share sale agreements and all other documents and returns.
Can I set up a company in the UK if I’m not British?
Yes you can. You don’t have to be British to establish a business in the UK, and neither do your directors and shareholders. However, varying tax implications mean that you do need to carefully consider where you choose to manage and control your company from.
What is a Company Secretary?
Appointed by the Board of Directors, the Company Secretary is the administrative officer in charge of ensuring that all legal and financial aspects of the business are run correctly and efficiently – overseeing good corporate governance and compliance with all regulatory responsibilities. He or she also works to maintain the statutory registers, and acts as intermediary on all issues between the company’s shareholders and its board. At Goodwille, we are able to act as Company Secretary on behalf of our clients, attending board meetings and advising on all corporate legal and financial issues.
Is it obligatory to appoint a Company Secretary in the UK?
It used to be, but for private limited companies it hasn’t been a legal obligation since 2006. However, it is still legally necessary to do everything a Company Secretary would do – such as maintaining statutory records, completing and filing forms, organising meetings and resolutions, maintaining contact with the authorities, and communicating with all company stakeholders. So if you didn’t appoint a Company Secretary, these duties would fall to you and your Board of Directors.