He writes:
Whist there is no obligation to be located in the UK, investors may feel that they can operate more effectively with “boots on the ground”. Opening an office in Cambridge or its surrounding region can be an attractive option but there are some points to consider.
First and foremost, assistance should be sought from a UK-based firm of accountants and lawyers to provide more detailed guidance.
Legal entity: If you are going to have a physical presence in the UK, you will need to choose an appropriate legal vehicle, e.g. a newly incorporated company or a branch of your existing entity. Either way, it will need to be registered at Companies House. There are no requirements have UK-based directors or shareholders. However, you need a UK based registered office which will be on the public filings – a professional adviser may be willing to provide this whilst you search for premises, or longer term.
If you have locally-based directors or managers you may wish to consider the extent of their authorisation to commit the company to contracts or expenditure.
Bear in mind that UK companies are obliged to disclose the names of their shareholders on the public record at Companies House. Also, the ultimate owner of greater than 25% of the shares will need to be disclosed, even if the shares are in the name of a nominee or subsidiary company or trustees.
Tax: You will need advice on the right structure for your business from a tax viewpoint (in the UK and at home) as well as on the other UK tax formalities including for example Value Added Tax, payroll tax obligations (known as the ‘Pay as you earn’ or PAYE system), National Insurance contributions and the filing of returns according to what you propose to do.
Premises: You may choose to operate “virtually” and without premises, but if you do wish to occupy space then the expertise and local knowledge of a surveyor is essential. You will also need legal advice on the lease document. The practicalities will take time to organise in a constricted market.
Staff: If you plan to employ staff then you should familiarise yourself with the legal requirements including issuing terms of employment and the provision of pensions and other benefits. If you decide to engage consultants on a self-employed basis rather than commit to a full employment relationship (and the obligations that this would bring) then care is required. The UK tax authorities and Employment Tribunal can re-characterise the relationship as one of employment if that reflects the reality of the day-to-day relationship between the parties.
If any of your people will come from head office or elsewhere outside the EEA or Switzerland then you will need to establish whether a Tier 1 or 2 visa will be needed (which allow investors, entrepreneurs and skilled workers to work in the UK), and you must allow time for the application process. The position relating to EEA nationals is, of course, in a state of flux and again advice is required.
Employers’ liability insurance is compulsory and insurance should be arranged generally against the usual risks.
Financial Regulation: It is vital to establish whether your operations will require your entity to be authorised and regulated by the UK’s financial services regulator (the FCA). The triggers for requiring authorisation (“regulated activities”) are complex. They include arranging deals or managing investments (including shares); there are various exceptions.
Once FCA authorisation is obtained, regulated firms need to comply with the FCA’s rules for conduct of business and also regarding training, and approval of individuals performing key roles.
The FCA is currently obliged to authorise firms who are regulated in other EEA countries under the “passporting” regime (nb this option is only open to branches of the home-regulated entity, and not separate subsidiaries). The FCA’s conduct of business requirements must still be complied with. Obviously the ability to be passported is impacted by Brexit and this will require careful consideration.
There are also special restrictions applying to “financial promotion”, which includes advertising investment opportunities. They will also affect your marketing material and website.
You should note that the regulatory requirements will impact your activities in the UK whether or not you have an office here.
Along with other countries the UK operates a stringent legal regime to combat money laundering and financial crime and you may be obliged to comply with the detailed elements applicable to financial firms. Again, guidance should be sought.
Banking: You will almost certainly find it easier if you operate a UK bank account as well as your home country accounts. However, opening one isn’t always so easy – UK banks have strict requirements regarding new accounts (see paragraph above) and this can appear bureaucratic and very time consuming. If your shareholders are offshore then it may be difficult or even impossible to open an account. You will need to allow plenty of time and we recommend making enquiries of two or three banks to establish their precise timescales and requirements.
Finally, part of the benefit in operating locally is the ability to make personal contacts and access market insight and you may wish to join relevant trade bodies and networking groups. Cambridge is especially strong in this area!