Formation Company & Tax Advisory

Monday, July 16, 2018

Establishing British Companies (UK)

The formation of a company in the UK does not require the presence of a Notary, unlike in other countries. The British system distinguishes the company from "Incorporated " ones, i.e. Legal entities with juridical personality (such as corporations), and "Unincorporated" ones, i.e. Legal entities without juridical personality (such as partnerships).

A foreign investor who intends to start a business in Britain has the possibility to choose between different options of business , which are in particular:

  • Register his company with the Registry of Businesses at the Companies House.
  • Set up a new company in compliance with the British Law in force.
  • Work in the UK as a Sole Trader.
  • Establish a partnership with one or more British companies (Partnerships).
  • Establish a place of business or branch.
  • Enter into an agreement of cooperation with another employer or company already included in the British market (Joint Venture).

Companies incorporated in the UK must comply with certain financial and Legal requirements, including:

  • Preparation and draft of their profit and loss account managed by an authorized Individual.
  • Filing their income statement by the relevant Registry of Businesses.
  • The obligation to pay the Corporation Tax and fill in their Tax Return.
  • The obligation to publish, at least once a year, a general meeting of Shareholders. Private companies may renounce to this requirement.
  • The obligation to deposit, with the relevant departments, an Annual Return on the corporate structure.

It should be noted that, according to British company Law, the company and its Director/s, Shareholder/s or Member/s are different Legal Entities with a separated Legal status, with the obvious consequence that a British company has rights and obligations which are independent of those related to each Individual, which can indeed stand up for it and take Legal action in its own name.

Since October 1st, 2009 foreign companies with permanent presence in the UK, have had to register with the Companies House. The UK Establishment is mandatory in all cases where a company operates in the UK, contracting with agents and/or consumers in that Country, directly employing people in the UK, and anyway whereas the economic activity is carried out on a regular basis in that Country.

The main company that can constitute in the UK are:

  • PRIVATE LIMITED COMPANY – LTD O LIMITED: I.e. private assets firms with limited liability.
  • LIMITED LIABILITY PARTNERSHIP – LLP: I.e. firms made by Individuals and/or Legal Entities with limited liability.
  • PUBLIC LIMITED COMPANY – PLC: I.e. private assets firms with limited liability, qualified to trade in equity securities.
  • PRIVATE UNLIMITED COMPANY - PUC: I.e. private assets firms with unlimited liability.

For these companies, with the exception of a Private Unlimited Company - PUC given its low level of use referring specific insights can be found in their sections on this website. In fact in every PUC partners are personally liable for any debt incurred by the company. With a few exceptions, this kind of company is not required to submit any account to Companies House, but it must present annual accounts.

The procedure for setting up a company in the UK is carried out upon presentation of a series of documents to the Authorities in charge, such as:

  • A Certified copy in English language of Articles of Association and the Memorandum of Association or Articles of Incorporation.
  • A List of Director/s of the company, and if there is, the name of the first Secretary.
  • A List of residents which are authorized to receive legal notifications of behalf of the company.
  • A statement certifying the date when the place of business or branch was established.

They must present a certificate attesting to the validity of the company with the payment of the minimum capital required by Law. Among all the countries in Europe, surely the UK is the most convenient one where to develop the business because of:

  1. Its Lack of red tape.
  2. Its low taxation.

Among the company forms provided for this jurisdiction there is certainly the Private Limited Company - LTD or LIMITED , the easiest one to set up and manage. The advantages of this particular type of company are:

  • Absence of tax lump for the enterprise.
  • Osimple and intuitive Corporate operation.
  • Possibility of Private Limited Company for Sole Traders.
  • Taxation among the lowest in Europe.

BBC-LLP offers its first consultancy for free - First Meeting* to anyone wishing to get further info about how to set up a United Kingdom Company.

For more details, click here.

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