Business PlanningGeneralTAX For Companies

US Company looking to invest in the UK? This is what you need to think about

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newsletter-UKUSA-ben As a result of the UK’s decision to Brexit, the pound is at a low against the Dollar not seen since 1985. Despite many economists’ predictions that the economy will decline as a result of Brexit it has recently been reported that Britain is currently the fastest growing economy in the G7. Consumer confidence and the housing market especially in London remains strong. This would lead to suggestions that now has never been a better time to invest in the UK. If so, these are the key points you might want to consider:

Branch V Subsidiary

In the UK the subsidiary is a separate legal entity and therefore it provides a layer of protection for the parent. A subsidiary will also need to file its own financial statements. A branch on the other hand is not seen as a separate entity of the parent and the parent will need to file its financial statements with Companies House.


Employment legislation will require employees to have a written contract and the company to register with the tax authorities (HMRC) for payroll and other taxes. Companies are now required to enrol eligible employees into a company pension scheme.

Seconded Staff

Individuals seconded to the UK will need to register with HMRC and obtain the relevant Visa. Have you considered the seconded individual’s tax position? The secondee may be entitled to certain tax free benefits depending on the length of their secondment for example a relocation allowance. It is worth noting that a director of a UK company is required to prepare a self-assessment tax return each year.

Registration for VAT

Currently if taxable turnover is expected to exceed £83,000 then you will need to register for VAT. The nature of the goods that the company is supplying may determine the amount of VAT that is charged. It may still be beneficial for the company to register for VAT so that it can reclaim VAT on its purchases. It might be worth considering whether the client imports the goods directly from the overseas supplier.

Transfer Pricing

If the UK entity is acting as a sales office for the parent and is recharging its costs back, it will be required to show turnover and a profit. Under transfer pricing regulations you will need certain documentation in place to support the price at which you invoice the parent.  There is a requirement to charge a market rate for such goods and services.


Naturally the company will need to account for all the transactions it incurs and account for VAT if relevant. At the end of each financial year it will need to prepare a set of financial statements that are compliant with UK company law. These financial statements may need to be audited if the company meets the audit criteria. Clearly these are just some of the issues to think about and if you would like to discuss this in more detail then please contact us.    

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