Services by Italian staff in the UK

Updated: Jan 27

18 May 2021

The following outlines the UK’s VAT position in the employment of Italian Staff:


What is required to transfer employees to the UK to perform installation services


1. The system for transferring employees to the UK depends on the type of contract and the types of services performed in the UK.

2. Business activity in the UK. Freedom of movement between the EU and UK has ended. EU, EEA, and Swiss citizens entering the UK for work purposes may need to apply for a visa through the UK’s points-based immigration system. This depends on the nature of their visit. For visits under 6 months, EU, EEA, and Swiss citizens can enter the UK without applying for a visa. They may participate in certain business-related activities (see below permitted business-related activity for visits to the UK under 6 months). If you require EU, EEA, or Swiss citizens to go to the UK to work for longer than 6 months, you will need to check the UK’s immigration laws.


3. Will Italian citizens need a visa for short visits to the UK? EEA & Swiss nationals visiting the UK can participate in a variety of business-related activities without a visa, for example attending meetings, events, and conferences. In most cases they will be able to stay for up to six months (which exceeds the minimum period agreed as part of the reciprocal arrangements). Longer visits may be scrutinised to ensure that only permitted activities are being carried out.

4. What about business travel? If a person is classed as a business visitor, their visit to the UK must be linked to their employment overseas. Therefore, if a person is required to carry out some of their employment activity in the UK, this is permitted provided their stay in the UK is less than 6 months and complies with the permitted activities contained in the appendices of the UK immigration rules. It will be for the individual to assess whether the intended activities fall within the permitted activities. For any other activities, business visitors are not permitted to work or base themselves in the UK and will need to apply for a visa under the new immigration system.

Below are business activities that are permitted and prohibited under the TCA. However, there are some exceptions included for specific countries which makes the rules more complex.

5. Which business activities are permitted during short-term visits to the EU? The TCA sets out a list of the business activities that are generally permitted for short term visits to the EU. These include:

  • Meetings, conferences or consultations with business associates.

- Certain research (including market research) and design activities. - Trade fairs and exhibitions for promoting company products or services. Certain limited sales activities, such as taking orders or negotiating the sale of services or goods; entering into agreements to sell services or goods. However, delivering goods or supplying services is not permitted. (See below restriction on sales);

6. What activities and arrangements are prohibited by the TCA under the travel arrangements for short term business visitors? There are certain prohibited activities and arrangements such as:

- selling goods and services to the general public.

- receiving remuneration locally; - engaging in the supply of certain services. Individuals travelling to carry out such activities are not covered by the short-term business visit arrangements. Therefore, certain activities are prohibited by business visitors from the EEA & Switzerland, these include:

  • carrying out paid or unpaid work for a UK company or as a self-employed person;

  • carrying out a work placement or internship;

  • selling directly to the public or providing goods and services.

To carry out such business activity, or for business visits of more than six months, a visa application would need to be made under the UK points-based immigration system or for some other visa that permits work to be undertaken.

7. Manufacturing and supply of goods

Employees of foreign manufacturers who provide goods and services in the UK can come to the UK as a visitor to install, dismantle, repair, service or advise on equipment, computer software or hardware, where such manufacturer has a contract of purchase or supply or lease with a UK company or organisation (PA 7. Immigration Rules Appendix Visitor: Permitted Activities. Permitted Activities for visitors). Where UK and EU companies have entered into a contractual agreement, employees can visit the UK to oversee delivery of that contract. Repeat visits are possible if the duration of the contract is for more than six months but there should be a clear end date for the work.

In addition, those intending to carry out any of the following ‘permissible activities’ are to be considered as business visitors:

  • Representatives of foreign manufacturers coming to service or repair their company’s products within their initial period of guarantee;

  • Representatives of foreign machine manufacturers coming to erect and install machinery too heavy to be delivered in one piece, as part of the contract of purchase and supply (11.2.4 Permissible activities as a business visitor of Guidance Business visitors: VAT11).

It is worth noting that each of the permitted activities will be assessed on a case-by-case basis and are subject to differing rules. For example, for this permitted activity, the expected length of stay is one month despite the general rule of 6 months for visitors. Although a longer stay will not be an absolute bar, their visit will likely be subject to closer scrutiny and visits could be refused.


8. Intra-corporate activities. An employee of an overseas based company may:

  • advise and consult; and

  • trouble-shoot; and

  • provide training; and

  • share skills and knowledge;

on a specific internal project with UK employees of the same corporate group, provided no work is carried out directly with clients (PA 5 Immigration Rules Appendix Visitor: Permitted Activities. Permitted Activities for visitors).


9. UK visa application process:

  • Register for an account.

  • Complete the application form in English.

  • Pay for the visa fee online.

  • Print out your form.

  • Book and attend an appointment at the appropriate visa application centre.

  • Get your fingerprints and photograph taken at the visa application centre.

10. What you need at the UK border. You must provide a valid passport or travel document. Your passport should be valid for the whole of your stay in the UK. You may also be asked to prove:

  • you’re eligible for the activities you want to do;

  • you’ve arranged accommodation for your stay;

  • you’ll leave at the end of your visit;

  • you’re able to support yourself and your dependents during your trip (or have funding from someone else to support you).

11. COVID-19 Test to Release scheme for international arrivals. If you do not qualify for a business exemption, you can pay for a COVID-19 test. If the test is negative, you can reduce your self-isolation period after international travel. The scheme is voluntary and applies to England only.


The Italian employees will remain employed in Italy but will not stay longer than 90 days in the UK

1. A potential risk relates to the creation of a permanent establishment (PE) for local tax purposes. This could mean your profits may be taxed in Italy, as well as in the UK, depending on the activities.

2. Under UK law, a PE is either: 1) a fixed place of business (FPOB) in the UK through which the business of the enterprise is wholly or partly carried on or 2) an agent acting on behalf of the enterprise that has, and habitually exercises in the UK, authority to do business on behalf of the enterprise.

3. Figuring out whether an FPOB exists involves looking closely at:

  • the nature of the physical presence;

  • its duration; and

  • the personnel involved in the activities.

4. In general, an FPOB would be:

  • a physical location;

  • fixed in position;

  • of more than a temporary nature;

  • at the disposal of an enterprise; and

  • where the enterprise’s business is wholly or partly carried on.

5. However, consideration must also be given to whether there is a double tax treaty (DTT). The DTT definition of a PE differs a little from the domestic law definition. Under the clause 2, article 5 of UK-Italy DTT the term "permanent establishment" includes especially both (b) a branch and (g) a building site or construction or assembly project which exists for more than twelve months.


6. Installation services will be performed no more than 90 days, therefore the services will not lead to the creation of Permanent Establishment.


Would it be possible for the individual to leave the UK for a short time say 2-5 days and return to the UK

  1. There are no restrictions for permanent establishment or VAT questions.

  2. Additionally, there is no restrictions in case of multiple visa. In case of visiting UK under the rules for business visiting, for example in case of Manufacturing and supply of goods there are restrictions: Repeat visits are possible if the duration of the contract is for more than six months but there should be a clear end date for the work.

Does the Italian installing company need to be registered for a UK VAT position?


1. Foreign companies must register for UK VAT immediately if they are providing taxable supplies; there is no longer any non-resident VAT registration threshold. VAT registration features depend on the cost of delivery.

2. Consignments valued at £135 or less. The seller must charge and account for VAT at the point of sale, unless the consignment is a business to business sale and the customer has given them their UK VAT registration number (according to description they are not our cases). To charge and account for VAT the seller will need to:

  • know the precise nature of the goods to find out the correct rate of VAT to charge (from description – 20%);

  • register for VAT - sellers that are already registered for VAT do not need to re-register (we need to register);

  • keep records of the goods sold, and make sure they get accurate information to apply the correct VAT treatment to them.

Therefore, for sales to consumers of consignments of goods that are under £135, there is no import VAT due, but instead there is a requirement for the seller to declare supply VAT. This means that the seller must be VAT registered in the UK and pay the VAT due on such sales to the UK VAT authorities, HM Revenue & Customs (HMRC). The seller will need to collect this VAT from the customer, or else the VAT will be deemed to be included in the price paid. B2C sales of goods shipped from overseas up to £135 in value HMRC is introducing a system where sellers of goods up to £135 in value will need to charge output VAT like a comparable UK business. Such imports will no longer be subject to import VAT. For goods sold directly by an overseas seller to a customer, this will mean that the overseas seller will be obliged to register and account for VAT to HMRC. Royal Mail or shipping agents will no longer collect the import VAT from customers.


3. Consignments valued at more than £135. Normal VAT and customs rules will apply on importation of the goods into Great Britain from outside the UK or into Northern Ireland from outside the UK and EU (Guidance “VAT and overseas goods sold directly to customers in the UK”). Therefore, for sales over £135 to UK consumers, a non-UK seller (including EU sellers) would be able to zero-rate the export sale, but the consumer will have to pay import VAT and possibly customs duty.

4. Low value consignment relief. Low value consignment relief (LVCR), which is an import VAT exemption for goods valued at £15 or less, has been removed in Great Britain for goods imported from outside the UK (Guidance “VAT and overseas goods sold directly to customers in the UK”).

5. Goods that are in the UK at the point of sale. If overseas seller owns goods of any value that are located in the UK at the point of sale the company must register and account for VAT on any sales the company makes directly to customers in Great Britain.

6. What action should sellers based outside the UK take?

- Identify the VAT status of your buyer for low value goods – this may require additional processes at ordering, and potentially linking to the UK register of VAT registered persons to verify. You may also wish to review the ‘customer experience’ so that any VAT or duty cost to your customers is clear. This will also apply to goods over £135.

- If sales of any low value goods are made to UK consumers, you will need to register for VAT in the UK (if you aren’t already – HMRC will charge penalties if this is not done).

- As a VAT registered business in the UK, the seller will need to comply with UK VAT rules including filing returns, paying tax and keeping digital records. However, as a VAT registered business, the seller will be able to reclaim VAT that is incurred in the UK, subject to holding proper invoices. Each 3 months the seller files a VAT return and pays to HMRC the VAT on sales (to consumers and non-VAT registered businesses) made, less the VAT on purchases bought in. Sellers based outside the UK can manage the process remotely or can appoint a local agent.


The overseas sellers who import goods into the UK and sell from UK inventory. Where the overseas seller sells direct to the customer from UK-located inventory, the seller will remain obliged to register and account for UK VAT on the sale.


What documents are required for temporary VAT registration, and in what language


1. Temporary VAT registration. Abolition of UK VAT registration threshold. If you know you're only going to breach the threshold temporarily, you can apply for an exception.There is no VAT registration threshold for non-UK established businesses and they are required to VAT register as soon as they start to make supplies within the UK that are liable to UK VAT. VATA 1994, Sch 1A; Value Added Tax Regulations 1995, SI 1995/2518, Reg 5; Schmelz v Finanzamt Waldviertel [2010] All ER (D) 252 (Oct).


2. Overseas businesses that supply services to UK customers who are private / non-business (B2C) may need to be registered if the place of supply of those services is the UK. This would include services directly related to land situated in the UK, admission to events and entertainment / performance services undertaken in the UK. Please see the Place of supply of services ― hiring goods and means of transport, Place of supply of services ― services supplied where performed and Services relating to land and property.


3. VAT registeration. If it has been identified that an overseas business is required to VAT register or decides to voluntarily VAT register, it has three options as to how the registration is coordinated. The business can:

  • appoint a VAT representative who will be joint and severally liable for any VAT debts incurred by the business. It should be noted that this option is very rarely used because very few representatives would be prepared to be liable for the VAT debts of an overseas business and normally appointing an agent is sufficient;

  • appoint a tax agent in the UK to deal with its UK VAT affairs;

  • deal with all the VAT obligations of the business including registration, record-keeping and completion of returns using internal resources.

4. If the business has elected to register directly with HMRC, the business will be referred to as an NETP. An NETP needs to VAT register directly with the NETP department at HMRC.


5. The business, or its adviser, need to ensure that they complete and submit the appropriate application form to HMRC.

Standard applications and applications to register as an overseas business (non-established taxable person)

Applications to register a VAT group or keep another business’ VAT registration number

HMRC VAT Registration Service

Crown House

Birch Street

Wolverhampton

West Midlands

WV1 4JX

HMRC VAT Registration Service

Imperial House

77 Victoria Street

Grimsby

DN31 1DB

6. The list of relevant forms:

Relevant form

Form

VAT1: application for registration

VAT68: request to transfer a VAT registration number

VAT1TR: appointment of a tax representative

7. Receiving a VAT registration number. HMRC is required to undertake some checks before issuing a VAT registration number. However, if the business submitting the form provides accurate information, a VAT number can normally be issued within 15 working days of receiving the completed application form. If the business has not received a response from HMRC after 15 working days then it should contact the relevant HMRC Registration Section to request confirmation that HMRC received the form. However please note that overseas businesses will normally need to wait longer than 15 days before receiving a VAT registration number. (VATA 1994, s 3(3)(4), Sch 3B, Part 1, para 1; Directive 2006/112/EC Opens in a new window, Article 214)


8. The business will be sent a Certificate of VAT Registration which will show all of the following information:

  • the person’s registration number

  • his effective date of registration

  • particulars of the person and the business he carries on

  • the date on which his first prescribed accounting period ends, and

  • the length of subsequent prescribed accounting periods

9. It should be noted that it could take a short period of time before the number is issued and during this time the effective date of registration may occur before the number has been received. Ideally, the business should gross up the net amount charged to the customer by the relevant amount of VAT, so it has received the full amount due from the customer.


10. The business will also now be required to start completing a VAT return. It should be noted that businesses are required to file their VAT return electronically online via the HMRC website. Businesses are no longer allowed to complete a paper return unless they can satisfy HMRC that they have an acceptable reason for submitting paper returns.


11. Appointing an agent. It is normally advisable for an overseas business to appoint a tax agent in the UK to deal with its UK VAT affairs, as they will be unfamiliar with the UK VAT rules and / or how to complete and submit the UK VAT returns and application forms. The agent can be an internal person if the overseas business has a UK branch or subsidiary, a UK firm of accountants, tax advisers or solicitors.


12. It should be noted that if the business elects to appoint an agent, it will still be responsible for ensuring that its VAT returns and other documents are completed and submitted by the due date. If it fails to ensure that it has submitted the relevant documentation in time, the business will be liable to any financial penalties imposed by HMRC and not the agent.


13. The overseas business will need to notify HMRC that it has elected to appoint a UK tax agent and the business and the agent will need to either complete and submit a form 64-8 or submit a letter of authorisation.Once appointed the agent can deal with registering the business for VAT in the UK, filing the UK VAT returns and other documentation and dealing with other queries raised by HMRC.


14. Appointing a tax representative. As stated above, a tax representative is joint and severally liable for the debts of the business. They are also required to maintain the books and records used by the business that they are a representative of. VATA 1994, s 48(2), (3); VATREG37500


15. If the business elects to appoint a tax representative then it must complete and submit a VAT1TR form in order to advise HMRC that another party is assuming responsibility for the VAT affairs of the business.


16. The completed form needs to be sent to the following HMRC address: HM Revenue & Customs VAT Registration Service Crown House Birch Street

Wolverhampton

W V1 4JX


17. Businesses can only appoint one person at a time to act as their tax representative. Businesses that register online for VAT will be asked to provide details of their tax representative. The business must ensure that they provide their tax representative with sufficient information to enable them to do the following on their behalf:

  • keep a VAT account.

  • complete and submit an accurate VAT return and other forms.

  • pay the correct amount of VAT to HMRC.

18. It is important to note that HMRC can direct a NETP to appoint a UK-based tax representative if it deems it necessary in order to protect the revenue under VATA 1994, s 48(1). If a business has been directed by HMRC to appoint a tax representative and refuses to do so, HMRC can demand that the security is paid under VATA 1994, Sch 11, para 4(2).


Place of supply services for VAT purposes

  1. An important exception to the general B2B and B2C rules is that the place of supply for a land service depends on where the land or building is based. So, if an Italian builder is building an extension for a British business on a property in London, the fees will be subject to UK VAT. Land services include both professional and construction services.

  2. The place of supply. The place of supply of services directly related to land or property is where the land itself is located, irrespective of where you or your customer belongs. Place of supply of services (VAT Notice 741A) provides examples of services that are, and are not, directly related to land and property. You should also refer to this notice for detailed guidance on the place of supply of construction and other land-related services.

  3. Work carried out in the UK. If the place of supply of your construction services is the UK (including the Isle of Man but not the Channel Islands) then your supplies are within the scope of UK VAT and you may need to register and account for VAT.

  4. The VAT treatment of construction services will change on 1 March 2021, however, will not affect these services to the consumers.


Can the Italian company apply to a VAT Registration simplified procedure?


This is maybe about simplified declaration procedure. This simplified procedure allows an economic operator to omit some particulars and supporting documents of a standard declaration at the time of customs clearance. The simplified customs declaration is a twostep procedure as follows:

  • The simplified declaration, containing the minimum required data elements is lodged by the economic operator;

  • The supplementary declaration, containing the remaining required data is lodged after the goods have been released.

The simplified declaration, containing the minimum required data elements is lodged by the economic operator. The supplementary declaration, containing the remaining required data is lodged after the goods have been released.


However, simplified declaration procedure does not replace the need for VAT registration under the standard procedure.


Additional information on VAT position

  1. VAT invoices. The normal rules for the content and format of VAT invoices will apply. The seller should issue a full paper or digital invoice for goods.

  2. VAT records. The seller (provider of services) must keep full records (including VAT invoices) for 6 years from the date any goods are sold.


Customs duties – who is the importer to the UK? Procedure


1. General information regarding importation declaration. Imports under £135 are not subject to customs duties. It will still be necessary for customs declarations to be made even though there will be no VAT or duty to pay. In recognition of this, the importation declaration should be quicker and easier to deal with.For imports which exceed £135, it appears that import VAT and customs duties will still need to be declared upon entry into the UK.


2. Determine the Importer of Record. If the import includes two parties, and not just one business moving goods between the UK and EU, they need to agree which side will be responsible for the clearance requirements. This includes customs import declarations, import duties or tariffs (if payable) and import VAT. The elected party is known as the Importer of Record.


3. Get a UK EORI. To identify yourself to the UK customs authorities for imports (and exports) you will need an Economic Operator Registration Identification (EORI) number. This must be entered onto all UK customs declarations and similar paperwork. HMRC has already issued these to all UK VAT registered businesses with international trade. Businesses importing goods may now apply to HMRC if they do not already have a number. If you are importing into the UK, you must be a resident business for certain UK Customs issues, including the declarations. You may require an import customs representative if you are not a UK-resident importer.


4. Import VAT obligations.

  • Have your customer pay under Delivered At Place (DAP) Incoterms. However, B2C consumers will be unlikely to shop with you again if they are hit with an unwelcome VAT bill.

  • Pay at Customs

  • Defer the import VAT payment via Postponed VAT Accounting in your UK VAT registration.

The UK is permitting importers to defer the completion of customs declarations for most imports until 1 July 2021.


5. Decide how you will complete import declarations. As the Importer of Record, you may complete customs export declarations and processes yourself, or appoint an intermediary:


Complete your own customs import process:

You can purchase commercial declarations software, and it is recommended that you seek training on customs processes.

You must apply to be authorised to submit simplified import declarations for the deferred customs declarations to 1 July 2021.

You must apply for a CHIEFS ‘badge’. This is HRMC’s import online registration system.


Use customs intermediary. The following parties are usually approved by UK's HMRC to represent importers and produce the Simplified Declaration:

  • Freight forwarders

  • Customs agent or broker

  • Fast parcel operators


6. Ensure you are ready: You will need to check that the exporter, if it is not you, from the EU is ready. This includes them having:

  • an EU EORI number;

  • obtained any EU export licences;

  • a statement of origin

  • an invoice;

  • a packing list; and

  • submitted export declarations in the country of the goods' departure. In return, they will receive an Export Accompanying Document (EAD) from the customs authority. This enables the goods to depart.

7. Moving the goods – paperwork and import taxes. If you have deferred the customs declarations, you must first update your own import records ready for when you do complete the declarations (1 July 2021 deadline). Then complete the supplementary declaration – or have your customs intermediary do so.


- HMRC will debit your duty deferment account if tariffs are due after your supplementary declaration has been received. Your VAT can be declared in your VAT return via Postponed VAT Accounting. If you are not UK VAT registered, then you will have to pay the duties to customs before they will release your goods.

- Prior to the movement, the EORI number is used with the CFSP EIDR UK registration system for the simplification and deferment of customs declaration and tariff payments. This should automatically include the goods movement in new Goods Vehicle Movement Service (GVMS) service. The GVMS then generates a Goods Movement Reference which the driver will need to board the ferry or Eurostar to GB.

- The importer of record into GB completes the final import entry (up to 30 June 2021 option if using CFSP EIDR). Any customs duties are paid via the duties deferment account.


Commercial goods (merchandise in baggage)

  1. You must tell customs (‘declare’) if you are bringing commercial goods into the UK in your accompanied baggage or small motor vehicle. Commercial goods are things to sell.

  2. You need to make a full customs declaration if you are bringing commercial goods that are any of the following:


Corporation tax registration


1. Italian companies do not pay Corporation Tax to another country on the profits from sales in that country, unless they trade through a permanent establishment there (in our case UK). Instead, they pay Corporation Tax on those profits in Italy.


2. The foreign company need to register for Corporation tax in some cases (see below), however based on information we have the Italian company, providing short-term services in the UK, does not need to register for Corporation Tax.


Registering as an overseas company.


3. Who must register. You must register if you set up a place of business in the UK or if you usually carry out business from somewhere in the UK. If you do not have a base in the UK. You do not need to register with Companies House.


4. How to register. You must fill in form OS IN01 and send it to Companies House within 1 month of opening for business. The address is on the form along with what documents you need to send. You must send a £20 registration fee with the form. You can pay by cheque or postal order.


5. Foreign companies need to register for Corporation Tax as a non-resident company if this company have sold, gifted or transferred interests in UK property or land.


Registering for Corporation Tax as a non-resident company if this company have sold, gifted or transferred interests in UK property or land.


6. Who should register. Register if you dispose of UK property or land and any of the following apply:

  • you’re a non-resident company and not registered with UK Companies House

  • you’re a collective investment vehicle (CIV) deemed as a company (as long as you have not elected for transparent or exempt treatment)

Re-register if you were previously registered for UK Corporation Tax but your company has since been dormant for Corporation Tax purposes.

7. When to register. You must register within 3 months of the date you become chargeable to UK Corporation Tax. You become chargeable when you sell, give or transfer ownership of UK property or land.


8. What you’ll need. If you’re registering for the first time or re-registering a company you’ll need the:

  • company name, registered address and contact details (HMRC will use the registered office address for initial contact)

  • previous company name (if there was one)

  • incorporation date and country of incorporation (or for a CIV the date of establishment)

  • company registration or incorporation number (if it has one)

  • director’s name, address and contact details (or for a CIV, somebody authorised to act on behalf of the CIV)

  • date of the disposal of interests in UK property or land

  • Income Tax Self-Assessment Unique Taxpayer Reference (UTR), if you have received UK rental income not subject to tax deducted at source

9. How to register. You’ll need the Government Gateway user ID and password you used in previous registration for Corporation Tax. If you have recently registered for online services it can take 2 to 8 weeks to receive your codes. They will arrive at the overseas registered office.


Operation of PAYE?


To register for PAYE, you'll first need to register your company. Only businesses that are registered with Companies House have the right to employ workers. Once you have registered your business, or if you are already registered as a business, you can apply for your PAYE number by registering as an employer.


What is required to be registered in the UK as a Branch of a foreign company incorporated in Italy


Registering as an overseas company.

  1. Who must register. You must register if you set up a place of business in the UK or if you usually carry out business from somewhere in the UK (Guidance “Overseas companies registered in the UK”).

  2. If an overseas company is carrying on business in the UK, it does not automatically mean that it must register with Companies House. You only need to register an overseas company when it has some degree of physical presence in the UK, such as a place of business or branch, where it carries on business.

  3. You do not need to register if there’s no physical presence in the UK. For example, an independent agent who conducts business on behalf of the company is not a UK establishment of an overseas company: neither is an occasional location such as a hotel where a director may conduct business during periodic visits to this country.

  4. How to register. You must fill in form OS IN01 and send it to Companies House within 1 month of opening for business. The address is on the form along with what documents you need to send. You must send a £20 registration fee with the form. You can pay by cheque or postal order (Guidance “Overseas companies registered in the UK”).

  5. Other types of commercial enterprises cannot register in the UK as an overseas company. Examples of these include: - partnerships - limited partnerships - unincorporated bodies - government agencies

What is required to establish a subsidiary in the UK

  1. Incorporation. The vast majority of companies are limited liability companies where the liability of the members is limited by shares or by guarantee. A business cannot operate as a limited company until it has been incorporated at Companies House under the Companies Act 2006. Establishing your business as a company means the directors are required to file certain documents every year such as annual accounts and a confirmation statement. They must also inform Companies House about any changes, such as the appointment or resignation of directors or a change to the company’s registered office.

  2. Who can incorporate a company. One or more persons can form a company for any lawful purpose by subscribing their names to a memorandum of association. In law, ‘person’ includes individuals, companies and other bodies. By completing the memorandum, the subscribers are confirming their agreement to form a company. Children under 16 don’t have the legal capacity to enter into a contract. The registrar won’t normally accept an application for incorporation if she is aware that the subscribers are under 16 (Guidance “Incorporation and names”).

  3. Types of company. There are four types of company:

  • Private company limited by shares: This company has a share capital and the liability of each member is limited to the amount, if any, unpaid on their shares. A private company cannot offer its shares for sale to the general public.

  • Private company limited by guarantee: This company does not have a share capital and its members are guarantors rather than shareholders. The members’ liability is limited to the amount they agree to contribute to the company’s assets if it is wound up.

  • Private unlimited company: An unlimited company may or may not have a share capital but there is no limit to the members’ liability.

  • Public limited company: A public company has a share capital and limits the liability of each member to the amount unpaid on their shares. It may offer its shares for sale to the general public and may be quoted on the stock exchange. There is further information about public companies(Guidance “Incorporation and names”).

4. Method and fees. There are three ways to incorporate a company:

  • Electronic Software Filing

  • Web services

  • Paper filing

5. Documents required to incorporate a company. To incorporate your company you must file the following documents:

  • Application to register a company (form IN01) and the fee;

  • Memorandum of association;

  • Articles of association (unless you adopt model articles in their entirety);

  • Additional information if your application includes a sensitive word or expression.

You may not be able to incorporate your chosen company name if it is the ‘same as’ another name appearing on the registrar’s index of company names. There is an exception to this if an existing company (or LLP or other body on the index) is part of the same group as your company and consents to the use of your proposed name. This is explained more fully in choosing a company name (Guidance “Incorporation and names”).


6. The application to register a company (form IN01). You must tell us:

  • the proposed company name

  • where the company is situated - whether the registered office is in England and Wales, Wales, Scotland or Northern Ireland

  • the registered office address - this must be in the same country your company is registered in, for example a company registered in Scotland must have a registered office address in Scotland

  • whether the company will be private, public or unlimited

  • details of the company’s intended business activities by reference to a standard industrial classification code (SIC)

  • choice of articles of association

  • details of the proposed director(s), and the secretary if it has one

  • details of people with significant control (PSC), or other legally required statements such as a statement that the company does not have any PSC

  • directors’ service and residential addresses

  • a statement of capital and initial shareholdings or a statement of guarantee

  • whether a company limited by guarantee wishes to apply to be exempt from needing to use ‘limited’ or ‘cyfyngedig’ in its name

  • if the proposed name contains a sensitive word and a section requiring confirmation that you have requested the views of a government department or other body.

  • a statement of compliance or guarantee

7. Registered office address, service address and usual residential address. Your registered office address is the company’s official address. This is where all written communication must be sent. If you choose to use a third-party agent to handle your mail, you must make sure that the service includes sending all of your company’s mail to your registered office address.

The address must be:

  • a physical address in the UK

  • in the same country your company is registered in, for example a company registered in Scotland must have a registered office address in Scotland.

A service address is one that can be used by a director to receive communications from third parties about the company. The service address can be the same as the person’s residential address, or the registered office address of the company, or it can be somewhere different. A usual residential address is the usual home address of the director concerned. You must file this at Companies House, but it will not be available on the public record for everyone to see. It is held on a private register that’s only available to predetermined organisations (Guidance “Incorporation and names”).

8. Memorandum of association. The memorandum of association confirms the subscribers’ intention to form a company and become members of that company on formation. In the case of a company that is to be limited by shares, the memorandum will also provide evidence of the members’ agreement to take at least one share each in the company.

9. Articles of association. A company’s articles of association are its internal rulebook, chosen by its members. Every company is required to have articles, which are legally binding on the company and all its members. The articles help to ensure the company’s business runs as smoothly and efficiently as possible and will set out how decisions are taken by the members and directors as well as various matters connected with the shares.


10. What happens to incorporation documents sent to CH. If the documents satisfy all the appropriate examination checks, CH will incorporate the company, issues a certificate of incorporation, and place the documents on the company record for public inspection. The incorporation does not take effect until Companies House has issued the certificate of incorporation. You should bear this in mind before obtaining company stationery or creating bank accounts.

11. Certificate of incorporation. The certificate of incorporation is conclusive evidence that the requirements of the Companies Act 2006 as to registration have been complied with and that the company is duly registered under this Act. The certificate will state:

  • the name and registered number of the company

  • the date of its incorporation

  • whether it is a limited or unlimited company, and if it is limited whether it is limited by shares or limited by guarantee.

  • whether it is a private or a public company

  • whether the company’s registered office is situated in England and Wales, Wales, Scotland, or Northern Ireland

12. The minimum share-capital requirement can be as low as £1.


13. A UK subsidiary must have at least one named director. It must also have a registered office address and a residential and service address for the director, though only the service address will be publicly displayed. As the new entity will be a subsidiary, you must also name another individual and company as shareholder in the subsidiary, i.e. your parent company.

14. The process of setting up a UK subsidiary can be completed within few days, but you will need to provide Companies House with a number of documents, the most important of which is the Articles of Association. This is effectively the subsidiary’s governing document and lays out clearly the structure of the subsidiary and relation between company and shareholders.


15. Once set up, the UK subsidiary will be required to provide statutory accounts to Companies House, and may have to submit to a statutory audit, although this is likely to depend on the size and profile of the overseas company. The subsidiary will also have to register for corporation tax and possibly for VAT and UK payroll tax, though administrative matters are fairly straightforward to arrange.

If you have any other questions or comments, don’t hesitate to contact

Mikita Makayou at mikita@lexefiscal.com or Dr. Frank Clifford at clifford.frank@lexefiscal.com.

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