The Companies Act 2006 requires that certain branches of overseas companies operating in the UK must be registered with Companies House and must file certain documents. These notes provide an overview of the requirements.
Requirement to Register UK Branch
A non-UK company is only required to register a UK branch if it is carrying on a business through a UK establishment. The branch must have a physical presence in the UK through which it carries on business (e.g. an office) in order to be deemed to have a UK establishment and therefore be required to register at Companies House.
The UK establishment must file the following documents at Companies House within 1 month of being established:
- Application form OS IN01 notifying of a registration requirement in the UK
- Registration fee of £20
- Certified copy of the company's constitutional documents (for instance, charter or articles of association) with a certified translation into English where required
- A copy of the company's latest set of accounts (again with a certified English translation where necessary) if the company is required to prepared and file accounts under local law (see below)
A certified copy or translation is one which is authenticated by a secretary, director, permanent representative, administrator, receiver or liquidator of the company. A person certifying a translation must sign at the bottom of the document.
Tax Considerations
An overseas company operating through a UK branch will become subject to corporation tax on its profits if it is operating through what is termed a "permanent establishment" (PE). A permanent establishment consists of a fixed place of business through which a business is being run. A permanent establishment can also arise where a dependent agent in the UK is concluding contracts in the UK on behalf of the overseas company.
A company operating through a PE will be assessed on UK profits calculated as if the PE were a separate entity (in accordance with OECD recommended practice in its Model Treaty).
Exceptionally, a company may be subject to income tax if it is deriving trading profits from the UK but not through a PE. This would generally only arise where there is no double tax treaty in place (but note that all overseas companies will be subject to income tax on property rental income arising in the UK).
A company operating through a UK PE or otherwise chargeable to UK tax will be required to register with HMRC on establishing the branch and must file annual tax returns.
An overseas company may obtain a voluntary UK VAT registration if trading through a UK branch, and may be required to register if its taxable supplies exceed the registration threshold.
Accounting Obligations
Most overseas companies are required to file annual accounts at Companies House where they are operating through a UK Establishment.
European Economic Area (EEA) Companies
EEA companies must file accounts only where they are required to do so under their local law. The accounts must be submitted within 3 months of the local filing deadline. If there is a local requirement to prepare but not file accounts, the accounts do not need to be filed at Companies House. If there is no local Audit requirement then an Auditor's Report does not need to be filed at Companies House.
Non-EEA Overseas Companies which file accounts locally
If a non-EEA overseas company is required to prepare and file accounts under local law then it must submit a copy of these accounts to Companies House. The accounts must be filed within 3 months of the due date in the country of origin.
Both EEA and non-EEA companies which file local accounts must submit Form OS AA01 to Companies House alongside their accounting documents. The form will contain the following information:
- The legislation under which the accounts have been prepared and / or audited
- Whether the accounts have been prepared under GAAP and the organisation which issued the accounting principles
- Whether the accounts have been audited and if so if they were audited in accordance with GAAP
- If there has been no audit, whether the company is required to have its accounts audited
Non-EEA Overseas Companies not required to file accounts locally
Even though they may not be required to prepare or file accounts in their home state, such companies must still prepare and file accounts at Companies House. There are very detailed requirements as to how the accounts must be prepared. The detailed provisions can be found in the Overseas Companies Regulations (OCR) 2009, but the main requirements are:
- Calculation of the financial year (normally 12 months), accounting reference period and accounting reference date
- Accounts must be prepared according to the company's local law (provided the content meets the requirements of the OCR), in accordance with international accounting standards or the provisions of the OCR
- The accounts must be approved by the board of directors, one of whom must sign the company's balance sheet
- The directors must file the accounts at Companies House within 13 months of the end of the company's accounting period
A failure by any EEA / overseas company to file accounts by the due date is a criminal offence on every director who was a director up to the due date.
Summary
Most overseas companies operating through a UK establishment will be required to register at Companies House and file annual accounts and tax returns.
Verfides can assist with the notification and filing process, including full preparation of accounts in accordance with GAAP or the Overseas Companies Regulations, as appropriate
We can also assist with initial tax registration, VAT registration and preparation corporation tax and VAT returns. We also provide tax consultancy advice with regard to inward investment, such as the choice of suitable trading vehicle and cross-border tax planning for repatriation of profits, as well as international VAT matters.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
