You have an established business based outside the UK and you wish to open in this country. From a tax perspective, the first question to consider is whether you should open a branch or a subsidiary?
Each has its potential benefits and flaws.
For example, branches need to disclose to our Companies House – whose records are transparent and open to the world – the accounts and balance sheet of the main entity offshore. This can be an issue if you would rather these remain confidential.
This is simply the first of many issues to consider in advance of your arrival in the UK. Others include:
- Will you send some staff from abroad to work in the UK or only hire locally?
- How will you fund the UK operation? What will its debt-equity ratio look like?
- How will you manage the currency risk of your sterling exposure?
- Will there be a need to give parent guarantees?
- Is there a transfer pricing problem?
- Do you need to consider cross-border royalty charges?
- What will be the impact of VAT and will it be a real cost?
These are the sort of questions we would consider at an initial meeting to ensure that your new venture is established in the most tax-effective way in the short and longer-term.
ROBERT SCHON PLANNING AND TAX ADVICE 