Setup Your UK Subsidiary with our Joined up Accountancy and Legal Services

A subsidiary company is only necessary in a few scenarios. You need to think about setting up a subsidiary company if:

You are Operating Overseas – Foreign companies will always opt to setup a subsidiary company in the UK if their main company is based overseas. There are many tax and administrative advantages to doing this.

Two Different Businesses – Sometimes you may have different arms of your business that are so radically different that they need to be formally separated.

Team Differences – Some companies create a subsidiary if they have a team working on a different project at another office. The project is likely not relevant to the business’s primary purpose, so a subsidiary can allow them to make a formal separation.

Broadly, there are two main options available when doing business in the UK either a form of limited company (subsidiary) or a branch.

A subsidiary is an incorporated body (i.e. a company) and has a separate legal entity from the overseas parent.

A branch, which is an extension of the parent company, requires you to register the overseas entity as having a UK establishment with Companies House.

The most significant benefit of setting up a UK subsidiary is that you can grow your company beyond your home base. It also helps you avoid liability.

In any subsidiary situation, the parent company typically has control over an entity location’s behavior — which means any compensation issues or litigation will go to the parent company and not to the subsidiary. Although it diminishes your liability, setting up a UK subsidiary gives you a greater degree of independence.

As is the case with any private limited company, you can make changes to your subsidiary after its incorporation. This means part of the company can be sold to another company – meaning that it would have multiple owners, or you can remove the parent company and transform the subsidiary into a company that stands alone with no parent or holding company.

When setting up in the UK, there are several legal structures to choose from. The company structure most suitable to you will depend on your type of business, where you are based and whether you have employees on board or not. Below are some of the most common legal structures in the UK;

• Limited company

• Branch office

• Limited liability partnership (LLP)

• Sole trader

• Partnership

A company can typically be registered with Companies House in 48 hours once all documents are completed. A UK company must register for corporation tax with HMRC, within three months of starting to trade. The paperwork for registration is not too extensive, however, certain statutory documents will be required.

Opening a bank account is a time-consuming process as you will need to go through a money laundering process to ensure your company is credible for a corporate bank account. Therefore, prepare to have time and patience for this stage, it can easily take up to six months or more to complete.

Check if your bank in the company’s home country has any operations in the UK. In some cases, this might speed up the process, as it may prove some creditworthiness for the business.