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OUR OFFICES:
LONDON, UK Office | +44 20 3769 1690
CORK CITY, Ireland Office | +353 21 202 8069
Contact Monday to Friday: 9 am to 6 pm GMT time 
Skype: CALL | CHAT

SET UP YOUR BUSINESS IN
UNITED KINGDOM

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Investors & Entrepreneurs
Setting up their Business overseas

Eurofinanzza Tax Legal Law Center
Corporate Tax & Legal Consultors
Since 1998

Setting up your Business Company in the UK

Company Types in the UK
There are several types of companies in the UK; however, most common and frequently used forms are: Public Limited Company (PLC); Private Company Limited by shares (LTD); Company Limited by Guarantee and Limited Liability Partnership (LLP).

The distinction between the different types has important ramifications for the legal status of the company, particularly with regards to ownership and what happens if the company goes into liquidation.

Here, we’ll explain some of the most common types of company in the UK and what they mean for your business.

Public Limited Company (PLC)

A public company is a corporation whose ownership is open to the public. Anyone can buy shares in the company’s stocks.

A limited company is a corporation in which an individual’s financial liability for the company is restricted to a fixed sum – this sum is usually the value of their investment.

A PLC is a combination of these two concepts – it is a public company whose shareholders (who could, theoretically, be anyone) are responsible for the company’s financial liabilities to the extent of their investment.

The other key point of note is that before a PLC can start business, it must have allotted shares to the total value of at least £50,000.

Private Company Limited by shares (LTD)

In contrast to a public company, a private company cannot be owned by any members of the public. It will instead be owned by an NGO (non-government organisation) or a relatively small number of shareholders, and the sale of company shares is handled privately.

However, these companies are limited, like PLCs, and this has the same implications for a private company as it does for a public company. Once again, an individual is only responsible for the business’s financial liabilities to the extent that they invested in the company.

Private limited companies are one of the most common types of companies.

Company Limited by Guarantee

A company that is limited by guarantee is very different to the two previous types of limited company. In this case, the individuals are not responsible for a fixed sum based on their investment, as this company status is reserved for companies that don’t have shareholders, like smaller, non-profit organisations.

Instead of shareholders, these companies typically have a group of members who act as guarantors and agree to contribute a nominal sum towards the winding up of the company, in the case of such an event occurring.

According to UK law, these companies have to include ‘Limited’ in their names, but exceptions can be made, for example, in the case of companies that are not distributing their profits to its members.

Limited Liability Partnership (LLP)

The first thing to note about LLPs is that they are not legally treated as partnerships in the UK, instead, they are treated as incorporated bodies that are more similar to the other types of company looked at in this post.

For a business to be an LLP, some or all of the partners have to have limited liabilities, which means that they are only responsible for their own misconduct or negligence, rather than being responsible as a collective (which is the more traditional partnership model).

Another key element of an LLP is that, unlike other corporations, the partners are allowed to directly manage the business. In other company types, the shareholders have to vote to elect a board of directors, and the board employs other people to manage the company.

The UK LLP
Limited Liability Partnership
The Limited Liability Partnerships Act of 2000 created for the first time a British version of the American limited liability company (LLC). Like its America cousin it is governed by an Operating or Limited Liability Partnership Agreement and can be structured in a way to allow non-UK resident individuals, conducting all their business outside of the UK to enjoy the prestige of a genuine British entity without liability to UK taxes. However, it is important to note that tax consequences may be created in the jurisdiction of management and control and/or the fiscal residence of the beneficial owners depending on double taxation treaties and the specific drafting of the Partnership Agreement.

The tax authorities in the United Kingdom have confirmed that the taxation base of a limited liability partnership will follow the procedure operated in the past for partnerships. The Limited Liability Partnership itself will not be liable for taxation on profits arising within the partnership, but the profits will be assessed to tax separately on the individual partners.

And here that’s where we need to pay the best attention on how to incorporate this LLP; in other words, if taxes fall upon the partners, this means that if you would be appointed as the partners of the LLP, you would be liable to personal taxation in your own residence country; which can be avoided; how?

By incorporating the LLP with 2 International Business Companies (Offshore IBC’s) to act as the Partners for the LLP thus, your name would not appear on the registrar of companies of this LLP, and the partners, as offshore entities, would be and will be full tax exempted.

Each IBC would refer to one separate Delegated Member (as minimum required to set up a LLP in UK), while we can provide you our Secretarial Services, required for filing regular forms with Companies House, in order to keep the Company in Good Standing and thus comply with all legal regular requirements; you can either act as a Non-Delegated Member, which we do not suggest, but, instead, as the Legal Attorney for the LLP, with full powers, by means of a notarized and apostilled Power of Attorney to be issued in your behalf.

Important Remark
However, this does not mean that, besides incorporating your UK LLP, you must incorporate 2 separate IBC’s; of course, this is an option, should you wish it; however, to minimize your incorporation costs, we can provide you on an annual basis our Nominee Services for Delegated Members; in this case, we will appoint 2 of our own IBC’s to act as delegated Members on the UK LLP.

Let me give you some more and complete information about these LLP’s and their advantages.

A limited liability partnership must be a commercial venture operating for profit.

The advantages of operating in this way are that no personal liability falls on a member of a limited liability partnership for the contracts or debts of the limited liability partnership and there is no joint or several liabilities for the negligence of any other member. The organisation of a limited liability partnership may well, therefore, be a popular vehicle for future use by the professions in the United Kingdom and for international business operated by non-resident partners outside of the United Kingdom. There may well be taxation advantages to be obtained from this route, where multi-national business is being undertaken by an international of partners.

Tax Planning Credentials
Subject to the use of the correct structure and that there are no UK activities or ultimate UK beneficial owners it seems that the Inland Revenue will not seek UK tax at either a corporate or individual level.

If a United Kingdom LLP has only non-resident partners and no UK Business, it will not be taxed in the United Kingdom.

There is no requirement for a UK LLP to have a United Kingdom partner. As explained below no taxation should arise on non-resident partners on income from a UK LLP where the business of that United Kingdom LLP is managed, controlled and carried out outside the United Kingdom.

General LLP Benefits
  • The United Kingdom is actively pro-business and is relatively free of bureaucracy;
  • A virtual office presence can be established in London to give the impression of being a domestic LLP;
  • The Certificate of Formation, Articles of Organization (if applicable) and the LLP Agreement are remarkably flexible;
  • All legal documents supplied from the appropriate division of corporations can be quickly apostilled pursuant to the Hague Convention of 1961;
  • Highly respectable and credible jurisdiction;
  • Full range of services office address options;
  • UK LLP’s can be registered in as little as 12 working days (if expedited);
  • Well-educated population;
  • Highly developed corporate and general law;
  • Prestige of having a UK registered entity;
  • Low annual Companies House Duties;
  • Fiscal transparency for both domestic and non-resident LLP’s;
  • Ability of non-resident LLP’s to be externally managed in low tax, tax-free or tax exempted jurisdictions.

We offer a range of options to help you lodge your LLP at Companies House quickly and easily and ensure you can administer it with the minimum of fuss once it is registered. Of all the legislation of the last few years, the “creation” of limited liability partnerships is one of the most interesting. The essence of a limited liability partnership for practical purposes is as a vehicle to contain a partnership of any size where partners may be at risk from the careless or accidental negligence of a colleague. For example, partners in International accountancy firms would be protected from personal liability if a claim was successfully pursued by a major client. Partners in a construction business would be protected if a new building collapsed, causing high level claims against them. Other partnerships may be tempted to use a limited liability partnership for the same reason. A limited liability partnership may also be appropriate for a partnership where some partners are not actively involved. They might have once been called “sleeping” partners. This structure will be suitable for people engaging together in a property or finance venture.

A limited liability partnership is unlikely to be useful for a small trading company of any sort because a conventional limited company is likely to perform an appropriate role at less cost.

Tax Exemption
The highest degree of credibility

Types of Company
A limited liability partnership is a new form of legal business entity with limited liability. Limited liability partnerships are taxed as partnerships but in most other respects they are remarkably similar to companies. They must have at least two, formally appointed, designated members at all times. (Designated members are similar to executive directors and the company secretary of a company). If there are fewer than two designated members, then every member automatically becomes a designated member.
Key Corporate Features
General
Type of entity – LLP
Type of law – Common
Shelf company availability – Yes
Our time to establish a new company – 1 day
Minimum government fees (excluding taxation) – N/A
Corporate taxation – Fiscally Transparent
Double taxation treaty access – No

Share Capital or Equivalent
Standard currency – Not applicable
Permitted currencies – Not applicable
Minimum paid up – Applicable
Usual authorised – Not applicable

Directors or Managers / Designated Members
Minimum number – Not applicable
Local required – Not applicable
Publicly accessible records – Not applicable
Location of meetings – Not applicable

Members
Minimum number of Designated Members – 2 must be responsible for the affairs of the LLP
Maximum number – No Limit
Publicly accessible records – Yes
Location of meetings – Anywhere

Company Secretary
Required – Not applicable
Local or qualified – Not applicable

Accounts
Requirement to prepare – Yes
Audit requirements – Yes, but small company exceptions
Requirement to file accounts – Yes
Publicly accessible accounts – Yes

Other
Requirement to file annual Confirmation Statement – Yes
Change in domicile permitted – No

Important Information
UK LLP’s provided by TBA must be formed with a view to making profit and for the purpose of undertaking the international trade of goods or services either as principal or agent or for the provision of consultancy or related services.

International UK LLP’s established by us have pre-prepared operating agreements which preclude UK resident members, the undertaking of business in the UK, the ownership of property or shares and the sale of membership interests within the UK.

Designated Members
Every limited liability partnership must at all times have at least two, formally appointed designated members. (Designated members are analogous to the executive directors and the company secretary of a company).

Designated members are liable in law for failing to carry out these legal responsibilities. If there are fewer than two designated members, then every member is deemed to be a designated member. (The limited liability partnership may have decided that all members will be designated members or that only some members will be designated).

With the agreement of the other members, a member may become a designated member at any time. Designated members enjoy the same rights and owe the same duties towards the limited liability partnership as any other member. These mutual rights and duties are governed by the limited liability partnership agreement and the general law. However, the law also places additional responsibilities on designated members.

There can be an unlimited number of members.

Procedure to Incorporate
By submission of the Incorporation Document Form LLP2, together with the registration fee to the Registrar of Companies.

The following are to be confirmed to the Registrar of Companies on registration of a limited liability partnership:

  • The name of the limited liability partnership.
  • The address of the registered office.
  • The names and addresses of each of the corporations or individuals who are the first members of the limited liability partnership on establishment. Where they are individuals their date of birth must also be confirmed.
  • The designated members must be confirmed. The designated members are persons responsible for the statutory compliance of the limited liability partnership and need to be a minimum of two, unless membership of the limited liability partnership drops to one person only a compliance statement signed by a solicitor or first member confirming that the limited liability partnership is being established to carry on lawful business with a view to profit.
Time to Incorporate
Approx. 2 to 3 working days.

Compliance

Capital
The minimum capital contribution is £2.
Taxation
The members exemption from UK tax is only applicable provided that no business or trade is carried out with or within the United Kingdom.

In order to remain this status a limited liability partnership must be a commercial venture operating with a view to profit that is not in liquidation.

Double Taxation Agreements
The United Kingdom is party to more double tax treaties than any other sovereign state. However, access to treaty benefits for UK LLPs is determined by the residence of members, consequently International UK LLP’s cannot benefit from UK treaty access.

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