Part I
Doing Business in the UK
The United Kingdom is one of the world's largest economies. It is attractive to international companies because of its market size, its deep talent pool, its competitive corporation tax regime, and its position as a gateway to European, Commonwealth and US capital. For most overseas businesses, the first practical question is not whether to enter the UK — it is how formally to do so.
Trading without a UK presence
An overseas company can sell into the UK directly from its home entity, without any UK registration, provided it has no physical place of business and no UK-based employee with authority to conclude contracts on its behalf. Many companies operate this way for years.
When activity becomes a "taxable presence"
A UK presence is typically considered to be triggered by any of the following:
- Opening a UK office, store or place of management.
- Appointing a UK-based sales lead with authority to sign contracts.
- Storing stock in the UK with public-facing signage intended to attract customers.
- Establishing any operation with the appearance of permanence — premises, locally engaged staff, public dealings with third parties.
Registration characteristics HMRC looks for
- The appearance of permanency — an extension of the parent, not a transient site.
- Management on the ground, materially equipped to negotiate business.
- The ability to deal directly with third parties from the UK location.
- Occupied premises from which officers, employees or agents act for the overseas company.
An employee working from a UK residential address does not, on its own, create an establishment — but it will put HMRC on notice via PAYE, and the substance of the role matters more than the desk it is performed at.
Voluntary registration: the upside
Even where registration is not legally required, many companies choose to formalise. The benefits are commercial as much as legal:
- More attractive to UK talent — easier to offer pensions, healthcare and statutory benefits.
- Easier to transact for routine UK services (mobiles, leases, software, payment processing).
- Signals long-term commitment to UK customers and partners.
- Stronger local brand presence and after-sales support.
Penalty for ignoring the rules
If an overseas company fails to register a UK establishment within one month of setting one up, an offence is committed by the company and by every director or agent who knowingly permits the default. Where the position is unclear, take advice early.
Part II
Branch vs Subsidiary
Once an overseas company decides to formalise, the choice is almost always between a UK branch (a registered "establishment" of the overseas company) and a UK subsidiary (a separately incorporated Private Limited Company). They look alike from the outside. In law, they are fundamentally different.
The subsidiary (Ltd)
- A separate legal entity, incorporated in the UK under UK company law.
- Limited liability — the parent's exposure is capped at the paid-up share capital.
- Subject to UK corporation tax on worldwide profits.
- Files its own UK statutory accounts; may require a UK audit depending on size.
- Profits taxed in the parent only when distributed as dividends.
The branch (UK establishment)
- Not a separate legal entity — an extension of the overseas company.
- The overseas parent is fully liable for the branch's debts and obligations.
- Subject to UK corporation tax on activities carried on by the branch.
- Must file the parent's audited financial statements (translated into English) at Companies House.
- No UK audit of the branch itself; no stamp duty on capital contributions.
Side-by-side
| Dimension | Subsidiary (Ltd) | Branch |
|---|
| Legal personality | Separate from parent | Extension of parent |
| Liability | Capped at share capital | Parent fully liable |
| Set-up time | Hours (Companies House) | 4–6 weeks |
| Disclosure | Subsidiary's accounts only | Parent's full accounts filed in UK |
| Corporation tax | On worldwide profits of the Ltd | On UK branch activity |
| Audit | May be required | Not for the branch itself |
| Exit | Wind-up or strike-off (3+ months) | Automatic on cessation |
Which should you choose?
If you are testing the market with a small team and limited commitment, a branch may be lighter to operate. If you intend to hire at scale, raise UK investment, sign enterprise contracts, or insulate the parent from UK liabilities, a subsidiary is almost always the right answer — and is by some margin the more common choice.
"Setting up a branch is often less ongoing administration; a subsidiary is the longer-term, more secure structure that adds credibility and commercial respectability."
Other structures, briefly
- Limited Partnership (LP) — flexible, but the general partner carries unlimited liability.
- Limited Liability Partnership (LLP) — separate legal personality; members limited to capital.
- Private company limited by guarantee — used by not-for-profits and member organisations.
Part III
Operational checklist
Once the structure is chosen, the practical to-do list is broadly the same. The order matters: some items unlock others (a bank account is far easier with an entity and a registered address; a payroll scheme is required before the first hire's first payday).
Week 1 — Incorporate
- File at Companies House: director, registered office, shareholder(s), Articles, PSC register.
- Order a registered office / virtual address if no UK premises yet.
- Confirm corporation tax UTR from HMRC.
Weeks 2–4 — Operate
- Open a UK business bank account (digital banks typically 1 week; traditional 3–6 months).
- Register for PAYE before the first UK hire's first pay date.
- Register for VAT — mandatory above the £90,000 threshold, voluntary below.
- Take out Employers' Liability Insurance (legally required once you have UK employees).
- Take out Public Liability Insurance if the public will be on your premises.
Months 2–6 — Establish
- Lease premises (or step up from a virtual address); fit-out and utilities.
- Hire locally, or move overseas employees under appropriate visa/sponsorship.
- Stand up UK marketing — local SEO, PR, and an initial outsourced sales motion.
- Implement finance, HR and payroll systems on UK-appropriate platforms.
Year-end and beyond
- File statutory accounts at Companies House within 9 months of year end.
- Submit a CT600 corporation tax return to HMRC within 9 months and 1 day of year end.
- File the annual Confirmation Statement; report changes to directors / PSCs within 14 days.
- Review whether the audit exemption applies (size thresholds: turnover, assets, employees).
If things don't go to plan
A branch closes on cessation of trade once Companies House is notified. A subsidiary requires a formal wind-up or strike-off — three months minimum and contingent on no objections. Building an exit plan into the original structure decision saves time and cost later.