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When do I need to establish an entity in the UK?

Two factors to consider:

  • Need to register with Companies House – annual accounts filing
  • Need to register with HM Revenue & Customs – pay tax 

Register with Companies House:

  • Physical presence- an office, somewhere you regularly do business.

Register with UK Tax Authorities:

  • When you have a permanent establishment
  • A UK Company
  • When you are performing your core business function in the UK.
  • When you get beyond “testing the water” or purely marketing to actually carrying out business.

e.g. Permanent Establishment:

Software provider, has a desk in a serviced office in London. Starts off visiting for a week to see if the UK market is for him.  

He has no need to register either at Companies House of for Tax purposes at this stage. Later he takes on a member of staff to work every day out of the serviced office looking for customers in the UK – this is a physical presence – business is regularly being done from the office space and there is a degree of permanence. He now needs to register with Companies House as a UK establishment of an overseas entity.  

This means he will need to files his home country financial data, translated in to English if necessary, on public record in the UK. At this stage many business will decide to open a UK Company which will allow them to keep their home country information private.

Soon our software provider lands his first clients in the UK, he starts to write the software they require and to give customer support services based in the UK – he is now performing his core business activity in the UK and he has to register and pay UK tax on profits.  

We would recommend forming a company at this stage if it has not been registered before.

ACC 6

Disclaimer:

This note does not contain a full statement of the law and it does not constitute legal advice.  Please contact us if you have any questions about the information set out above.

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