UK Starting Business

With the high costs of forming companies in most European countries compared to the UK, it has become commonplace for businesses abroad to register a company in England Scotland or Wales and then to use this as a vehicle to create a foreign branch in their country of residence.

The UK incorporated company in this respect is nothing more than a shell and all business activities are conducted through the branch company, thereby evading the large expense of setting up an official in the home district.

The foreign branches pay the requisite business taxes in their countries and subject to double tax treaties between the UK and their homeland, are largely free from British taxation.

The widely held belief amongst participants of such schemes is that dormant company accounts can be prepared and submitted to Companies House on the basis that the UK operations are non-existent.

In fact, as the British company controls and owned the foreign branch, any accounts made up must include the activities under such ownership.

In most cases, this simply necessitates the translation on foreign branch accounts in to Great British Pounds, adjustments to any formatting differences and then the submission of the consolidated amounts to Companies.

The figures submitted do need to checked and where appropriate signed of by a suitably recognised Accountant. Here the role of the Accountants is not so much involved with the preparation but usually restricted to the agreements of translated amounts and their presentation in the financial statements.

The substance of the UK company, foreign branch arrangement is neither the reduction or otherwise subversion of taxes owed to Revenue and Customs. It is a mechanism which is used to provide cheaper costs of starting a business for European residents which their own countries embroil in highly administrative, legal and costly procedures.