Trading in the UK: establishment or subsidiary?

There are a number of options for overseas companies wishing to trade in the UK. In this article, we briefly explore two of the options from a corporate legal perspective: the first is to register a UK establishment, and the second is to incorporate a UK subsidiary.

What works for a specific overseas company will depend on a number of factors including:

• the services or products the company is selling;
• tax, financial and operational considerations;
• the requirements of any UK regulator (where applicable);
• whether the overseas company wants the UK entity to have a separate legal “personality” to the overseas company.

1. Set up a UK establishment

Foreign companies wanting a UK presence may establish a branch or place of business within the UK and register with Companies House as an overseas company. This option creates certain initial and ongoing administrative obligations for the overseas company, including the requirement to register certain details or “particulars” and to update the register if there are any alternations to these items. Overseas companies which have set up a UK establishment may also be required to file their annual accounts at Companies House.

While an overseas company can register an alternate name under which it proposes to trade in the UK, it is important to note that the UK establishment does not have a separate legal status or “personality” from the overseas company. The UK establishment of a foreign company will not be a separate legal entity so the overseas company will be liable for any obligations incurred in the UK.

2. Incorporate a UK subsidiary

An overseas company can choose to set up a UK subsidiary with the overseas company as its shareholder. The overseas company will need to identify one or more persons to act as directors of the UK subsidiary.

There is a simple process to incorporate a UK company. There are also ongoing requirements to make certain filings at Companies House. In addition, if the overseas company has no other subsidiaries, incorporating a UK subsidiary may trigger the requirement for the overseas company to produce group accounts.

A UK subsidiary company will have a separate legal personality, and can therefore trade directly with customers or clients.

Where an overseas company has an existing arrangement in the UK, it should regularly review those arrangements to ensure that they are suitable and meet that overseas company’s requirements.

This article is provided for information purposes only. It is not intended to constitute legal advice, and should not be relied on or treated as a substitute for specific advice relevant to particular circumstances. If you would like more information, please contact our legal services team.