Something quite unique about UK business is the presence of a Company Secretary. But what exactly is a Company Secretary, and does your UK operation need one?
A Company Secretary is an officially appointed board member or officer who takes on a number of the Directors’ administrative and compliance duties. Here in the UK, a Company Secretary is mandatory for public companies and although not legally required for private companies, many choose to appoint one anyway.
Goodwille can provide a Company Secretary as an annual service to give you peace of mind that your UK company is compliant, and administration is streamlined. As Company Secretary we make sure your business is compliant and governed according to UK standards and best practice. This includes for example maintaining and reviewing statutory registers, filing confirmation statements and annual accounts, and we would also have the authority to sign documents in the general dealing of the company.
Goodwille act as Company Secretary for hundreds of foreign-owned businesses where the directors are often based abroad, to ensure their businesses are effectively run in the UK. If you are looking for support with managing the ongoing compliance of your UK subsidiary, then don’t hesitate to contact us at Goodwille or read more about our Company Secretarial service offering here.
Have you heard of the Enterprise Investment Scheme? The EIS is a UK Government initiative designed to help you raise money and grow your business, by offering tax reliefs to investors who buy new shares in your company. So, as someone planning to launch your business into the UK, it’s something you should be paying attention to.
Limitations on investments raised
Under EIS, there are limitations on the amount you can raise each year and the total amount you can raise in your company’s lifetime.
The great news is that foreign companies can apply for an EIS, but your company must meet the criteria set out by HMRC in order to qualify. Normal requirements still stand, such as types of trade, the age of your company and the number of employees. But foreign companies must also meet at least one of two additional requirements:
Even before you apply for an EIS, you can ask HMRC if they agree that your company is eligible for EIS. This is called Advanced Assurance and you can use this to show potential investors that the investment you’re asking them to make will qualify for a scheme and therefore tax concessions.
So the EIS could be a very useful tool in your arsenal! Goodwille can advise on if you qualify and support you with setting up an Enterprise Investment Scheme. Read more about how Goodwille can help you make the most out of the EIS and contact us today for support with setting up the scheme.
If you’re operating in the UK, your company Director will have a number of duties – as well as legal and financial responsibilities. You may wish to appoint a Company Secretary to support you with managing these obligations. Assuming these duties are the same as in the countries where you already operate would be a mistake. Let’s go through the essential things to know now.
Common law duties
The Companies Act 2006 outlines the Common Law duties of a Director, which are defined under ‘Good Faith’ and ‘Care and Skill’. These duties are based around acting in the interests of your company and exercising reasonable care and skill in carrying out your duties.
The Companies Act 2006 also outlines the statutory duties of a company Director which are to:
- act within the company’s powers
- promote the success of the company
- exercise independent judgment
- exercise reasonable care, skill and diligence
- avoid conflicts of interest
- not to accept benefits from third parties
- declare interest in proposed transaction or arrangement with the company
Financial and legal responsibilities
Your company Director will also have a few financial responsibilities. some of which include submitting accurate accounts to Companies House, paying staff correctly and submitting a company tax return to HMRC. There are also legal responsibilities as a Director such as filing Confirmation Statements and notifying Companies House of any changes in directorship or registered office.
Breaching these duties can result in fines or in the worst case, imprisonment and disqualification of future Directorship. The good news is that Goodwille can look after these financial tasks and legal responsibilities on your behalf through the provision of a Company Secretary. So don’t be complacent and risk not complying with your obligations here in the UK – get in touch and we can fill you in on all the finer details.
You may already be familiar with the term ‘VAT’, but it’s important to remember that VAT might work differently in the UK than the regions where you already operate. Let’s go through what you need to know for your UK-based operations.
How does UK VAT work?
VAT, or Value Added Tax, is a tax charged on the sale of most goods and services in the UK. The first thing to note is that you can only charge and claim VAT if your business is registered for VAT, which is a must if your turnover for any 12-month period exceeds or is expected to exceed the threshold.
Once your business is VAT-registered, you must charge VAT on your goods or services and report to HMRC the amount of VAT you’ve charged and incurred. This is done via a VAT return submitted electronically, usually on a quarterly basis.
In the UK, there are three different rates of VAT
- Standard Rate VAT: First, there’s a standard rate, which you’ll find charged on most goods or services.
- Reduced Rate VAT: A reduced rate VAT is charged on things like children’s car seats, sanitary products and energy saving measures.
- Zero Rate VAT: Then the zero rate is applied to most food, books, newspapers and children’s clothes.
There are also some items, for example postage stamps and financial and property transactions, which are classified as ‘exempt’ from VAT. This means that no VAT is charged on these goods and services.
For these zero rate and exempt items, even though no VAT is charged these transactions still need to be recorded on your VAT return.
There are also different things to keep in mind depending on whether you are buying and selling goods or services within or outside the Eurozone.
VAT Submissions & MTD
At Goodwille we can help you with VAT registration and the quarterly VAT return submissions, ensuring they are Making Tax Digital compliant. No need to get it wrong and incur penalties – Simply get in touch and we can make sure you are handling UK VAT correctly.
Goodwille have helped hundreds of businesses with setting up UK establishments and subsidiaries and while most of our clients have historically favoured a subsidiary, it is worth taking specialist advice to make sure the decision you make is right for your business. Read more about the differences between a UK establishment and a subsidiary and contact us today for advice on the most suitable setup for your business.
Transactions between subsidiary and parent company
There are a lot of things to think about when you are establishing your business in a new country. One thing you need to make sure you get right from the start is deciding how your parent company will transact across borders with your subsidiary company. You need to ensure you are compliant, but working in a way which is beneficial to your business.
Why it matters
Your UK business must have an economic purpose as the UK tax authorities will not look favourably if they are of the view that it only exists to incur the costs associated with generating revenue in a different territory. It is thus important to ensure that transactions between group entities are properly documented and priced in accordance with the transfer pricing methods to achieve arm’s length price. This is the case for example with a parent company selling goods or services to a subsidiary company, or vice versa.
A Cost-plus arrangement is the simplest form of transfer pricing method. With this arrangement, sales invoicing and revenue is collected by the parent company and the costs for the UK operation, such as office rent, salaries and marketing are charged back to the parent company by the subsidiary, with an agreed markup. By marking up the UK costs, at a predetermined rate, it puts profit into the UK subsidiary company.
Another common inter-company transaction is inter-company loans. This is where the UK subsidiary is funded by the parent company. In such cases it is important to ensure that there is an inter-company loan agreement in place – this should include the amount of interest rate to be charged and the repayment terms for the loan. Failure to put in place an agreement can create future tax problems, where the funding may be deemed an investment by authorities, rather than a loan.
The decision on how you transact between your group companies is usually determined by the nature of the business and overall group structure, and failure to set it up correctly at the start can result in significant unexpected future costs. Goodwille can support you with putting in place the relevant agreements, and through our network of specialist tax advisors, we can ensure your subsidiary is set up in a way which is beneficial to your business. Contact us today for more information.
As a UK employer, it’s your responsibility to make sure your company follows the relevant regulations in the UK, which might be different to the other markets you operate in. These regulations may vary depending on the type of job, industry and employment contract in place, but they are the foundation for fair treatment in your workplace.
Firstly, before hiring someone, you must check they have the Right to Work in the UK as a legal requirement.
Next, in the UK, you have two months after hiring someone to issue them with a written statement of employment as a minimum requirement.
Let’s go through some statutory rights that someone has as soon as they begin working for you in the UK:
- You must pay employees at least the national minimum wage and provide staff with an itemised payslip, offer eligible workers statutory sick pay, statutory redundancy pay, statutory pay for maternity, paternity, adoption and shared parental leave.
- You must offer a pension scheme that is compliant with auto-enrolment. It is the employee’s decision to opt-out of this if they wish to, however you must have a functional scheme in which they are enrolled into.
- Keep to the 48-hour average working week. If employees regularly work more than a 48-hour working week then either this needs to stop or they should voluntarily and expressly opt-out of the Working Time Regulations.
- Provide employees with a clean and safe work environment, including first aid equipment, protective clothing and drinking water.
- Provide a minimum of the required statutory holidays in the UK.
Failure to comply in some or all of these areas can put you at risk as a UK employer. For help and support and to make sure you are adhering to your responsibilities, do not hesitate to get in touch with Goodwille or check out our Human Resources service offering for more information.
So you’re thinking of hiring someone in the UK. That’s great! The UK is rich with talented people who come from a diverse range of industries and cultures and will be able to bring vital skills to your team. But what are the costs to your business for hiring an employee in the UK, over and above just your employees’ salaries? Let’s dive into some of the costs and terms you’ll start to hear often as an employer.
For each employee, an employer has to pay a certain percentage on all earnings above a threshold per month towards National Insurance. This cost is on top of the employee’s gross salary.
Pensions are a mandatory benefit for UK-based employees. As an employer, you must have a compliant pension scheme in place in which employer and employee contributions are required unless the employee chooses to opt out.
There are additional benefits which you may want to consider offering your employee, for example, Private Medical Insurance, Life Insurance, or Critical Illness Cover. These will typically incur additional employee-related costs, and through the bench-marking service at Goodwille, we can help you determine what is right to offer your employee based on their experience & the industry in which they work. Check out our video about your responsibilities as a UK employer for more insights and have a chat to the Goodwille team for advice on what might best for your business.
If you want to read more about how Goodwille can support you with managing your UK employees, please visit our pages for Human Resources advice and support and Payroll solutions.
If you’re launching in the UK, you might want to consider setting up a virtual office before you decide to open a physical office. We like to encourage our clients to do this for a few reasons.
First of all, using a virtual office is a cost-effective way to launch your presence in a new country while you’re testing the market. It allows you to reduce costs on things like staff and office rent, whilst keeping the flexibility should you wish to exit the market quickly. Using a virtual office also allows you to outsource tasks like mail handling, answering telephones, and customer support.
If you decide to open a physical office it’s important to base it close to your customers and where the talent in your industry is, but also somewhere that is easily accessible and with good transport links if you plan to travel to the UK from overseas frequently. Our London office is perfectly placed to take advantage of the UK’s finance and tech hub, but regions outside of London, like the industry-focused Midlands where our Warwick office is based, can also be attractive for inward investment.
Remember it’s much more attractive to your UK customers to interact with someone who has a local presence. So if you need help in deciding whether to open an office or go virtual then get in touch with Goodwille and we can help you decide where to set up your UK base for the best first impression on your UK customers. You can also check out our virtual office service offering for more insights on how Goodwille can support your UK operation.