IBA, as the premier business brokerage firm in the Pacific Northwest, is firmly established as a respected professional service firm in the legal, accounting, banking, mergers & acquisitions, real estate, and financial planning communities. Periodically, we will post guest blogs from professionals with knowledge to share for the good of owners of privately held companies & family owned businesses. The following blog article has been provided by Keith Tully of Real Business Rescue (www.realbusinessrescue.co.uk):
Purchasing a UK Company as a US National
If you are considering purchasing a UK company you may be wondering firstly, whether this is actually possible without being a resident there, and secondly, the criteria you must meet in order to complete such a transaction. The good news is that owning a business in the UK as an American citizen is absolutely possible; however, there are certain areas which are worth giving careful consideration to before you go ahead and start the process.
You do not need to move to the UK, nor do you need a residential address there in order to complete the purchase of a UK registered company. What you will need, however, is to register the company at a UK address; this does not need to be a property you own, many accountants or formation companies will allow you use their address for this purpose and will typically also offer a forwarding service as part of the fee. This is the address where legal notices and any official correspondence with Companies House, HMRC, and any other applicable mail from the government will be sent therefore ensuring you have access to the items being delivered to that address is paramount. You will also be required to register a service address for the delivery of general business mail; this can be located anywhere in the world.
You will have to register your company with Companies House in England and Wales, Scotland, Wales, or Northern Ireland depending on where the company will be based. Registering the company can be done online or by using a formation agent if you are setting up a brand new limited company; there is no need for you to physically travel to the UK in order to complete this process.
Bank Accounts and Securing Funding
While residency is not an issue when it comes to owning a UK company, you may run in to difficulties when trying to open a UK bank account if you are not able to provide a UK residential address. You should also be aware that the UK has particularly strict processes when it comes to enforcing their anti-money laundering efforts. This can make opening a bank account an arduous process for foreign nationals. Although there is no need to travel to the UK to register the company, you may find that a trip will be required if you want to open a UK bank account. It is wise to look at those banks that operate worldwide and have a branch in the US as well; this may save you having to make a visit across the pond.
If you will need external funding to either purchase the company, or to assist with operating costs or an expansion project once you own it, you may experience issues obtaining this regardless of whether you are looking for this in the US or the UK. While UK banks may not accept overseas security if this is required; US banks may not be willing provide funding if this is secured on assets located and registered in the UK.
If you are not planning to relocate to the UK after purchasing or forming your company, then you will not require a visa. Should your intention be to move to the UK to live and work, then you will need to apply for the relevant visa as a US national. Tier 1 visa programme does provide UK visas for foreign investors although you will need to meet strict requirements regarding the level of capital you have available to invest in your new business venture.
Different Reporting Processes
Tax, accounting and reporting standards and procedures are different in the UK, so it is wise to seek advice from a professional to ensure you remain compliant. Even though you may be based overseas, you will still need to adhere to the same responsibilities as directors who are physically based in the UK. This means registering for corporation tax as well as filing annual accounts and a confirmation statement on a yearly basis. You can complete these tasks remotely by submitting the relevant documentation online; however, you may wish to consider enlisting the help of a UK-based accountant to assist you in this process. Not only will an accountant operating in the UK be more familiar with what these documents are expected to contain and the format they should follow, but they will also ensure you meet the set submission deadlines which an accountant based in the US may not be as clear on.
Salaries and Dividends
The vast majority of directors of UK companies will extract money from the business through a combination of a regular salary topped up with dividends. This is by far the most cost-effective way of taking a regular income as you will be able to take advantage of the personal tax allowance (currently set to £11,850 as of April 2018) meaning you will not have to pay income tax on any salary which falls below this amount.
However, you should be aware that in order to put this into practice you must be registered as an employee of the company as well as its director. This is only possible if you hold a National Insurance (NI) number which will only be issued if you have the right to work within the UK. As a US citizen you do not have the automatic right to work in the UK and therefore you would have to apply for the appropriate visa in order to be granted this status. Remember though, that this is only applicable if you want to take money from the company through a regular salary, if you simply want to be a director of a UK company then a visa will ordinarily not be required.
Written by Keith Tully, partner at Real Business Rescue (part of Begbies Traynor Group plc). Keith has 25 years’ experience advising business owners and stakeholders on a range of issues including corporate finance, mergers and acquisitions. Mr. Tully can be contacted directly at 0800 644 6080 or firstname.lastname@example.org
IBA, the Pacific Northwest’s premier business brokerage firm since 1975, is available as an information resource to the media, business brokerage, and mergers & acquisitions community on subjects relevant to the purchase & sale of privately held companies and family owned businesses. IBA is recognized as one of the best business brokerage firms in the nation based on its long track record of successfully negotiating “win-win” business sale transactions in environments of full disclosure employing “best practices”.