An Introduction to Setting Up a Business in the UK

by Ian Phipps of Oury Clark

at Central Working Whitechapel

2 September 2014

Overview

• Very easy to set up a business:

• fast

• low cost e.g. £1 minimum share capital (or 10% of the cost of a pint

of beer in Norway…………! )

• Pro-business government:

• relatively low taxes

• “light touch” on legislation

• flexible employment laws

Structure

• Commercial Considerations - often most important!

• Subsidiary (limited company) or “UK Establishment” (branch of

overseas parent company) ?

• tax position

• accounts filing requirements

• dealing with various Government agencies

• customer perception

• Partnerships / LLP’s – too much uncertainty around future tax treatment

• Strong recommendation is to use a limited company

Ease of Set Up - 1

5

• Formation of a Limited Company

• quick (can be done in less than 2 hours…)

• inexpensive

• minimum share capital £1

• 1 Director, 1 Shareholder minimum

• signature and process now digital

Ease of Set Up - 2

• VAT (sales tax) registration

• £81k Threshold

• All online

• Non-UK company can register

• Payroll Registration

• Quick (10 Days)

• Relatively simple to administer

• Required for all UK employees

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Employment

• Self-Employed or Employee?

• Cheaper to be self-employed, HMRC will always want employees.

• Substance over form

• Grey area – Things to consider

• Personal Service (right of substitution)

• Mutuality of Obligation

• Right of Control

• Provision of Own Equipment

• Financial Risk

• Opportunity to Profit

• Length of Engagement(s)

• Benefits

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Corporation tax

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• £0 - £30Ok: 20%

• £300,001 - £1.5m: 21.25%

• > £1.5m: 21%

• Above bands divided by no. of “associated” companies

Tax reliefs

• Main tax reliefs in the UK likely to be of relevance

• Research & Development Tax Credits

• Patent Box

• Enterprise Investment Scheme (“EIS”)

• “SEIS”

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Research & Development

• Research & Development

• Significant tax incentives for companies undertaking R&D in the UK

‘An R&D project is one that seeks to achieve scientific or technological

advances. It will aim to advance the overall knowledge or capability in a field

of science or technology. It will involve significant scientific or technological

uncertainty.’

Research & Development

• SMEs get 125% in additional tax credit:

<500 Employees; and, either

Turnover < €100 million; or,

Balance Sheet < €86 million

Therefore a small company spending £1m on R&D gets extra tax deduction of £1.25m

• If loss making a tax credit (cash back) can be claimed

• Note: R&D has to be directed from UK, but not necessarily performed in UK nor does the IP need to be owned in the UK

Patent Box

• From 1 April 2013:

• 10% tax rate for income from Patents

• UK & European Patents only (EEA counts)

• Relief to be phased in over 5 years

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EIS

• 30% income tax relief for investor, for investments up to £1m

• Sale of shares is free of Capital Gains Tax after a qualifying period

• Capital losses on disposal of shares can be offset against income

• Other capital gains can be deferred by investment in EIS shares

• Qualification criteria to be met by fund-raising company

SEIS (“Seed” EIS)

• Available to very small start-up companies: ≤ 25 employees and ≤ £200,000

assets

• Investor receives 50% of the investment as income tax relief

• Investor may also get Capital Gains Tax relief of up to 28% (78% relief in total)

• Individual maximum: £100,000

• Company can raise a maximum of £150,000

• Investors can be company directors but can’t own more than 30% of the

company

The Oury Clark “Group”

Unlike most professional firms...

we see the whole picture.

• Commercial and pragmatic – we run

businesses…………

• A broad and high level of Interdisciplinary

professional skills at our core

• Coordination increases speed and

efficiency and decreases cost

• Specialists in overseas companies

establishing in the UK for 20 years

• Offices in Central London and beside

London Heathrow Airport

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Oury Clark Services

• Tax, audit, statutory accounts, back office (payroll, VAT)

• Immigration, employment, company commercial, property, IP

• Staff benefits, mortgages, pensions, healthcare, investments

etc

• Development/replacement capital, refinancing, M&A, MBO/MBI

• Individual authorisation, On-going compliance & reporting,

Registration advice and Systems & policy development

• Bookkeeping, Credit control, Management

accounting/reporting, Payment services, Payroll and VAT

compliance

• Managed bespoke service for all industries

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Oury Clark and Norway

• The following are among the Norwegian companies that Oury Clark has helped

and continues to help:

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Ian Phipps ACA CTAIan.phipps@ouryclark.com

M: +44 (0) 7866 518392

London Office Thames Valley Office 10

John Street 58 Herschel Street

London Slough

WC1N 2EB Berkshire, SL1 1PG

+44(0)20 7067 4300 +44(0)1753 55 1111