Managing a business in the UK – by Vanesha Kistoo
- What are the key aspects to consider managing a business in the UK when you are a foreign company?
Vanesha: To set up and manage a business in the UK requires careful planning and structuring. My view on the key 5 aspects to consider is:
Corporate structure: New businesses that are looking to set up in the UK can choose from the following corporate structures: a representative office, a limited company or a branch. The type of structure will drive what needs to be reported in the UK.
Setting up process: Build enough contingencies in your plans; some steps can take a lot of time to complete. For example, opening a new bank account in the UK, applying for a sponsor license.
UK tax landscape: Have an adequate budget for tax and legal advice. Businesses that are used to operate under a relaxed, no tax regime will find the UK tax regime complex.
Insurance: There may be specific UK requirements that you need to comply with e.g. Employers Liability Insurance, Directors Indemnity Insurance.
GDPR: The General Data Protection Regulation came into force on the 25th of May 2018 and is basically Europe’s new framework for data protection. It gives individuals greater control over who can hold their personal data and how their personal data can be used. Businesses need to have appropriate procedures and measures in place to determine what information they hold, to obtain consent and to keep an individual’s record up to date. Breaches can result in substantial (in millions) fines.
- What are your tips for managing a business in the UK?
Vanesha: It is a juggling act with a strong focus on risk management. My top 5 tips to effectively manage the key risk areas:
Tax planning: Most foreign entities that set up operations in the UK start with sending one of their senior executives to the UK to manage the process. Aside the need for a visa, there will be tax implications for both the UK business as well as the senior executive. Plan ahead as there are ways to structure a move to save income tax and social security.
Contract: Take appropriate legal advice to understand the laws that govern contractual arrangement (employee and supplier/customer) as there may be differences that you need to address.
Deadlines: The UK has one of the most structured, yet complex tax systems. Ensure you know what the corporate reporting obligations are, including the deadlines.
Changes: The global tax landscape is constantly evolving; make sure you keep up to date with upcoming changes to properly manage the impact on your business.
Global talent management: If you have employees coming to the UK on business trips or who are working remotely, there may be UK reporting obligations. Seek counsel on the legal and tax implications.
- What are the main consequences of Brexit to the management of businesses in the UK?
Vanesha: Some sectors have been impacted more than others by the uncertainty around Brexit. I see the main consequences as follows:
Strategy: Businesses, especially new businesses must evaluate whether they will be able to thrive in a post Brexit environment.
Diversion of resource: Due to a prolonged period of lack of clarity, a lot of resource (money and time) has gone into planning ‘what if’ scenarios instead of other important areas that need attention.
Costly: Businesses must put aside a budget to deal with Brexit related issues. According to The Bank of England, Brexit has cost the UK more than £440 million per week since the referendum.
Talent pool: Certain industries, those that rely heavily on the immigration, are likely to find it more difficult to find the workforce they need due to stricter immigration rules for low skilled workers.
Agile: Times of uncertainty mean businesses need to be able to respond quicker to changes in order to minimise losses.
The UK remains an attractive place to be. According to the Home office’s immigration statistics for the year ended March 2019, there were an estimated 143.9 million passenger arrivals in the year ending March 2019 (including returning UK residents). This represents a 4% increase compared to the previous year. There was also an increase in the arrivals from other EEA countries and Switzerland, by 6%, to 124.3 million. This may be a direct consequence of the relaxed immigration requirements for European nationals who arrive in the UK before Brexit date. It will be interesting to see what the numbers are post Brexit date.
Vanesha Kistoo is an experienced cross border tax advisor at Blick Rothenberg Ltd with over 12 years of experience working across a wide range of clients in the luxury sector, oil and gas, management consulting and Fintech industry. She hand holds companies looking to set up in the UK and helps them understand their employer reporting obligations, namely, tax planning for expatriates, assignment management, expatriate payroll management, tax and social security on employment related securities and complex tax return filing for senior executives.
Contact Vanesha, Global Mobility tax advisor at Blick Rothenberg Limited by email: Vanesha.firstname.lastname@example.org, telephone: +44 (0)20 7544 8975 or visit her website: https://www.blickrothenberg.com/
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