UKEstablishmentby City Solution

Checker

Should you set up a UK subsidiary or register a branch?

Eight questions on liability, disclosure, speed, hiring, regulation and where early losses can be used. Two minutes, then a recommendation you can take into a call.

1. Do you expect the UK operation to make losses for its first two or three years — and could your parent use those losses against its own taxable profits at home?
2. Is the parent comfortable with its own annual accounts and constitution appearing on the UK public register?
3. Do you want UK liabilities ring-fenced from the parent?
4. Is the parent a regulated business whose home licence must be the entity that contracts with customers?
5. Will UK customers, landlords or partners expect to contract with a UK company?
6. Do you need to be trading in the UK within a month?
7. Will you employ staff in the UK and need a UK bank account quickly?
8. Might you bring in UK investors or sell the UK business separately one day?

What the questions are getting at

Losses. The one structural advantage of a branch: UK losses can often be relieved against the parent’s profits at home. A subsidiary’s losses stay in the UK.

Disclosure. A UK establishment usually has to file the parent’s own accounts at Companies House. A subsidiary files only its own.

Liability. A subsidiary is a separate legal person. A branch is the parent, here.

Speed and practicality. A subsidiary incorporates in a day and banks find it far easier to onboard; a branch registration takes weeks and needs certified translations.

Exit. A subsidiary can take investment or be sold on its own. A branch cannot.