The checklist for setting up a subsidiary company in the United Kingdom is long and daunting. Beware. Moving staff across the globe or locating them in a foreign country is only the start. Add human resources consultation, payroll tax processing and filing, workforce management and compliance with every aspect of employment law and it is clear that establishing a foreign subsidiary eats up time and builds up costs. Hours or days spent online do not guarantee you are in control.
Using a Professional Employment Organisation (PEO) such as Bradford Jacobs, instead of forming a foreign subsidiary, means your company can be up-and-running in the UK in a few days rather than in weeks, or even months. We can source your new staff and then our Employer of Record (EOR) services take over to handle all legal and compliance issues.
How to set up a UK Subsidiary
The most common form of company for a UK subsidiary is the private limited company (LTD) and setting up a limited company involves following the detailed UK company registration process and applying to Companies House. Basic steps are:
- Decide on a company name, if different from parent company, and check availability. Have a registered office address in the UK. A UK subsidiary must have at least one named director
- Register at Companies House with a ‘statement of capital’ of issued shares capital at that time
- Provide Companies House with your Standard Industrial Classification of Economic Activities (SIC) describing your company’s area of business
- Compulsory registration for VAT if you expect your VAT taxable turnover to be more than £85,000 in the next 30-day period
The United Kingdom is one of the most business-friendly environments in the world. But the legal demands of setting up a subsidiary mean that a global recruitment outsourcing company such as Bradford Jacobs is the sensible choice when establishing a foreign subsidiary.
UK Subsidiary Laws
Setting up a subsidiary in the United Kingdom follows a standard process but must be strictly adhered to at the risk of falling foul of legal requirements.
- A UK company must be registered with the Registrar of Companies at Companies House
- All companies must file annual accounts. If annual turnover exceeds £10.2million or the balance sheet exceeds £5.1million, the company must have an annual independent audit
- Directors are personally responsible for submitting annual accounts to Companies House; non-compliance risks penalties
- After registration Companies House will pass details to HMRC and the company must contact their local HMRC office within three months
- The company must register for Corporate/Corporation Tax and strict schedules apply to paying tax on profits
- Employers must have in place the payroll to deduct from employees’ wages for Pay As You Earn (PAYE) tax and National Insurance contributions
Weeks spent dealing with laws related to setting up a UK subsidiary can be cut to hours by contacting Bradford Jacobs. Utilise our comprehensive expertise in global recruitment to set up a subsidiary in the UK.
Benefits of setting up a UK Subsidiary
The most obvious benefit of setting up a subsidiary in the United Kingdom is as a measure of a company’s commitment to international expansion. By making the move to operate outside their home territory a company becomes a ‘global player’. There is also the sense that having a UK address for the parent company adds to worldwide credibility.
Setting up a UK subsidiary is also a way to assess the potential of the market without capital expenditure. Using a global PEO such as Bradford Jacobs means staff can be sourced, placed in their roles with all the intricacies of payroll and taxation dealt with.
It would be a mistake to assume imposing a foreign strategy from the parent company’s home territory will work. Establishing a UK subsidiary with employees recruited in-country provides the chance to develop a culture and management style suited to the new market. Bradford Jacobs’ total understanding of the UK market will aid that process.
What you need to set up a UK Subsidiary
Companies looking to extend their global reach by establishing a subsidiary in the UK must be prepared to comply with the complexities of payroll, taxation, employment laws and regulations. This will have to be managed from the parent companies home country and could take months. So patience will be another requirement …
Work with Bradford Jacobs
The sensible route to take is alongside a PEO such as Bradford Jacobs, without the need to establish a subsidiary. Our outsourcing know-how will save time – you can have employees in place within days – and save money at the start of the venture as well as avoiding penalties or fines for non-compliance. There is no reason for borders or visas to stand in your way and no need to be buried under a mountain of paperwork.