How to start a company in the UK?

How to Start an Offshore Company in the UK (and Why You Probably Shouldn’t)

The term “offshore company” often conjures images of tax havens and complex financial structures. While the UK doesn’t fit the traditional definition of an offshore jurisdiction, it’s understandable why someone might be looking into setting up a company here with the intention of operating internationally. However, it’s crucial to understand what you’re actually trying to achieve and whether the UK is the right place to do it.

What are you really looking for?

Before diving into the “how,” let’s clarify what you mean by “offshore company.” Are you looking for:

• Tax advantages? The UK isn’t a tax haven. While it has a competitive corporate tax rate, it’s not zero. You’ll be subject to UK taxes on profits generated within the UK.
• Asset protection? While UK law offers some protection, it’s not specifically designed for asset shielding like some other jurisdictions.
• Simplified regulations? UK regulations are generally robust and transparent.
• A base for international trade? The UK can be a good base for international trade due to its strong legal system, infrastructure, and access to markets. However, this doesn’t necessarily require an “offshore” structure.

Setting up a UK Company for International Business

If your goal is to operate internationally from a reputable jurisdiction, setting up a standard UK Limited Company might be the right approach. Here’s a simplified overview:

1. Choose a Company Name: Ensure it’s unique and complies with Companies House regulations.
2. Appoint Directors and Shareholders: You’ll need at least one director and one shareholder. They can be the same person.
3. Register a Registered Office Address: This must be a physical address in the UK where official correspondence will be sent.
4. Prepare Memorandum and Articles of Association: These documents outline the company’s purpose and internal rules.
5. Register with Companies House: You can do this online through the Companies House website.
6. Open a UK Bank Account: This is essential for managing your company’s finances.

Important Considerations:

• Tax Residency: Even if your company is registered in the UK, its tax residency might be elsewhere depending on where the management and control are exercised. This is a complex area, and professional advice is crucial.
• Transfer Pricing: If you’re trading with related companies in other countries, you need to comply with transfer pricing regulations to ensure transactions are conducted at arm’s length.
• VAT (Value Added Tax): If your taxable turnover exceeds the VAT threshold (currently £85,000), you’ll need to register for VAT in UK. This involves collecting VAT on your sales and paying it to HMRC (Her Majesty’s Revenue and Customs). You can also reclaim VAT on eligible purchases. Even if you’re below the threshold, you might choose to register voluntarily.
• Compliance: UK companies are subject to various compliance requirements, including filing annual accounts and confirmation statements.

Why Professional Advice is Essential

Setting up a company, especially with international operations in mind, is a complex undertaking. It’s highly recommended to seek advice from qualified professionals, including:

• Accountants: To advise on tax planning, VAT registration, and compliance.
• Solicitors: To advise on legal matters, contracts, and corporate governance.
• Company Formation Agents: To assist with the registration process and ensure compliance with Companies House regulations.

While the UK isn’t a traditional “offshore” jurisdiction, it can be a suitable base for international business. However, it’s crucial to understand the implications of setting up a UK company and to seek professional advice to ensure you’re compliant with all relevant