Dipping your hands into international trading? Opening a branch in the UK could be a first step towards expanding your business. This may sound overwhelming, but it’s not as bad as it seems. In this article, we’ll break down what a UK branch is, what benefits it could serve, and all the wonderful information to help you along the way.
We’ll provide basic explanations so that by the end, everyone is on the same page. We’ll even give a quick example to explain the entire concept.
What is a UK branch of an Overseas Company?
A UK branch of overseas company can be thought of as an additional office to your business that resides in a foreign country, in this case, the UK. Unlike representative offices, it does not legally count as an independent company and remains under the jurisdiction of the parent company.
You may think of it as the public relations office of your company, tasked with handling things like marketing and research, but without the complete power to control the entity.
In the UK, people often use the terms “representative office” or “establishment” to refer to a business like this. There are limitations to what this type of business can do and it is only meant to assist. It was designed to help in tasks that are not too advanced and free of stringent commercial requirements.
If you’re looking to capture a slice of the market in the UK, a branch office may be a reasonable option for establishing a basic presence.
Why open a UK branch? Top benefits
What’s the incentive? Here’s why setting up a branch in the UK may make sense:
1. Access to New Customers
The UK is a gateway to Europe and the rest of the world. With a branch, you have a base from which you can reach out to customers and partners, even in the post-Brexit era.
2. Enhance Your Reputation
Being incorporated in the UK gives you additional credibility. The UK is known for having a strong legal system, and the entrepreneurial culture there makes it more likely for other countries to accept your company as legitimate.
3. Additional Protection for Assets
Depending on how you structure things, a UK branch may assist in tax planning. In addition, having legal assets in the UK is most comforting to the business owner when their assets in the UK are protected by law.
4. Streamlined Employee Relocations
Looking to deploy staff to the UK? A branch provides access to permits such as the Representative of an Overseas Business visa, which makes it easier to get your team on the ground.
5. Low Commitment Market Research
Not set up for a full subsidiary? A branch allows you to test the waters of the UK without having to make a hefty investment. It provides a practical approach to evaluating market potential.
How to registering a UK branch – a simple walkthrough
Looking to get one going? Here is how to register your UK branch from Companies House regulations:
Step 1: Make Sure It’s Necessary
You will only need to register if you have a tangible presence in the UK, like an office. If you’re merely selling via the internet or employing a distributor, then you can opt not to register.
Step 2: Organize Your Paperwork
You will need:
- Your company’s articles of association (or equivalent)
- Details about your UK branch (address, what it’ll do)
- Info on who’s managing it
If any of these documents are not in English, ensure to get them translated and notarized.
Step 3: Register with Companies House
You need to submit all documents to Companies House within a month of opening your branch. You can submit them online or by post, the only downside is there is a fee. When your application is accepted, you will be issued a registration number which you need to keep safe because you will need it later on.
Step 4: Follow the Regulations
You have to submit reports to Companies House every year, like documents on your finances and information about your branch. These inclusions are pretty basic, but still important.
Visa Opportunities for Your Employees
A notable perk of having a branch in the UK is bringing your employees along. Here’s what you need to consider:
Representative of an Overseas Business Visa
This visa is perfect for relocating a senior employee to manage your branch. They must meet the following criteria:
- Be a long-term staff member
- Have decision-making power
- Own less than 50% of your company
Subject to the above terms, foreigners can live in the United Kingdom for two years, or three years for those in certain media professions. It allows for the easy placement of a trusted individual.
Alternative Visa Options
If it doesn’t work for you consider:
- Skilled Worker Visa: For a particular category of employees with certain skills, which are always in great demand.
- Global Business Mobility visa: For mobility of employees in different branches of the same company.
Each of these has their own requirements, so determine what will be best tailored for your needs.
A Practical Case: Showing It On The Ground
Imagine the following scenario: You own a manufacturing company situated in Brazil. You have heard that British people have quite an appeal towards eco-friendly products, so you decide to open a branch in Manchester and see how it goes. You then send your operations manager overseas and he comes back with a Representative visa, and organizes an office and meets potential buyers.
They have clinched deals with two retailers within six months. The branch pays off, your brand gains traction and you can now start planning on a bigger move. Without taking that first step, you would have been behind. That is a win in the real world.
Be Cautious: What To Look Out For
It’s not all positives, here are a few factors to consider:
1. Unfavorable Relationships
Your branch does not exist independently from the other company. If it accumulates debts or other legal issues in the UK, your entire empire would be at stake.
2. Tax Headaches
Your branch may be liable for UK tax on profits. Speak to a tax consultant so that you do not get any nasty surprises.
3. Immigration Restrictions
The representative visa is limited such allowing no work changes while in the UK. Be certain that your intentions follow the set rules.
Final Thoughts: Are You Prepared To Dive In?
It could be the answer to your growth, credibility or new markets opening. It offers a lower risk extension approach and provides Europe with visa possibilities and a reputable business name. While there will be some hurdles to jump like taxes and legalities, the right preparation can help make sure the benefits are far more impactful than the risks.
If your company is considering expanding to the UK, why not take a look at this option? It might just be the exciting motivation you’ve needed. If you need help, firms like Legal & Imperial can assist you in every aspect of the process.
So, what are your beliefs – would a subsidiary in the UK be your next big step?
