International Expansion UK —
Your UK Market Entry, Structured for Success

Many overseas businesses begin taking UK customer orders, signing UK contracts or hiring UK employees before the UK entity is formally established — creating UK tax exposure for the overseas parent and compliance problems that are expensive to unwind. Establish the UK entity before any UK commercial activity begins.

An overseas company with UK-based employees who have authority to bind the overseas parent contractually may inadvertently create a UK permanent establishment — subjecting the overseas parent to UK Corporation Tax. We assess and document PE risk before UK staff are hired or UK offices are established.

HMRC requires all related party cross-border transactions to be priced at arm’s length from the first transaction. Establishing transfer pricing policies and documentation retrospectively is difficult — particularly if HMRC opens a compliance enquiry before documentation is in place. We establish arm’s length pricing methodology and documentation from the first intercompany transaction.

UK employment law is significantly different from most overseas jurisdictions — Day 1 written employment contracts, ACAS Code disciplinary procedures, statutory redundancy, auto-enrolment pensions. Using overseas employment contracts for UK employees creates legal exposure. We prepare UK-compliant employment contracts for every overseas client’s UK employees.

The optimal UK entry structure depends on your commercial objectives, expected profitability, liability considerations and long-term plans. Options include: direct sales from overseas (simplest but may create UK PE risk), UK representative office (no formal legal entity but limited activity), UK branch (extension of overseas parent — no liability protection) or UK subsidiary (separate UK company — best for liability protection, banking and long-term UK presence). We model all options and recommend the most appropriate structure.

An overseas company is subject to UK Corporation Tax on profits arising from a UK permanent establishment — broadly, a fixed place of business or a dependent agent in the UK. Simply having UK customers or making UK sales (without a UK physical presence or agent) does not create a UK PE. Having a UK office, warehouse or employees with authority to sign contracts typically does. We assess PE risk precisely for each client’s specific UK activities.

UK business banking for overseas-owned companies has become more challenging following enhanced KYC requirements. Traditional high street banks (Barclays, HSBC, Lloyds) typically require UK-resident directors, established UK trading history and extensive documentation. Challenger banks (Starling, Wise Business, Revolut Business) often provide faster account opening for newly incorporated overseas-owned businesses. We assist with bank introductions and KYC documentation for all international clients.

UK employees must have: a written employment contract from day one, auto-enrolment pension contribution from the first eligible pay date, at least National Living Wage (£11.44/hour for over 21s from April 2024), 28 days’ minimum statutory holiday (including bank holidays), statutory sick pay, statutory maternity/paternity/adoption pay, and access to disciplinary and grievance procedures compliant with the ACAS Code. UK employment law applies regardless of the nationality of the employer.

Transfer pricing requires related party cross-border transactions to be priced as if conducted between independent parties at arm’s length. For a UK subsidiary of an overseas group, this applies to: management charges from the parent, IP licence fees, intercompany loans, shared services and goods sold between group entities. HMRC requires documentation demonstrating arm’s length pricing for all significant intercompany transactions — with the documentation prepared contemporaneously (at the time of the transaction, not retrospectively).