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Setting up in the UK and staffing it from abroad

An overseas business deciding to establish itself in the United Kingdom usually begins with the question it can answer immediately, which is incorporation. A company is formed quickly and cheaply, and everything harder is left to follow it. A surprising amount of what goes wrong later is a consequence of that order.

Establishing in the United Kingdom is several projects rather than one, and they are ordinarily handled by separate sets of advisers who never speak to each other. There is the corporate workstream: the entity, its directors, its address, its banking and its accounting. There is the immigration workstream: whether the business can sponsor, and how the people needed to run the operation are to arrive. There is the brand workstream: whether the group's name is actually available for use in the United Kingdom. And there is the internal one that nobody is appointed to own, which is what the new UK company is permitted to use of the parent's brand, software and materials, and on what recorded basis.

Each set of advisers is competent inside its own boundary. The dependencies live in the space between them, and nobody is paid to stand there. The recurring failure has little to do with any single requirement being unknown. The requirements get satisfied in an order which makes some of the work worthless, and the cost of putting the order right afterwards falls on the parts that have already been paid for.

What follows is where those dependencies actually sit.

The name is the first decision and it is usually taken last

A group arriving in the United Kingdom incorporates under its own name, because that is the name of the business. Companies House accepts it, a certificate is issued, and everybody treats the name as secured.

Acceptance at Companies House is decided against the register of company names and against rules on sensitive and misleading wording. It is not a search of the trade mark register, it confers no right to use the name in trade, and it offers no protection against somebody who already holds rights in something similar in the United Kingdom. A name that has been used without difficulty in the group's home market can be occupied in the United Kingdom by a business the group has never encountered, in the very categories it intends to sell into.

The reason this belongs at the front of the sequence rather than somewhere in the middle is what a change of name costs once the entity exists. The name is on the certificate of incorporation, then on the bank mandate, then on employment contracts and supplier terms, then on any record the business holds with a government department, including its immigration records if it has got that far. Each of those has to be revisited by somebody, in the order the institutions concerned will accept, while the business is trying to trade and while people who have moved countries for the job are waiting to be paid. The clearance work that would have avoided it is among the cheapest items in the whole exercise, and it is frequently commissioned only after the letterhead has been printed.

A company that exists and a company that can be relied upon

Formation is deliberately easy in the United Kingdom, and that ease is misleading when the entity has to do more than exist. The corporate side optimises for speed, because speed is what it is asked for. Registered office services, a nominal address, directors resident abroad and no trading activity produce a company in short order and a very thin one.

Other parts of the plan need something more substantial. Opening a bank account is its own timetable and its own set of requirements, and it commonly turns on the entity's address arrangements and on who is accountable for it in the United Kingdom. Sponsorship, for its part, is granted to organisations that are genuine, lawful and actually operating, with people based in the United Kingdom who can be held responsible for the duties that come with it. A company built purely for administrative convenience can satisfy the corporate objective completely and still be the wrong object to present anywhere else.

There is a structural question underneath this that is worth settling early, because much else hangs off it. A group can operate through a UK subsidiary, or register the overseas company's UK establishment, and the two are different animals for the purposes of who the employer is, who holds any licence, who contracts with customers and where liability sits. With the whole picture in view the decision is not difficult to make well, and it becomes expensive to revisit once staff are employed and permissions have been granted against a particular corporate identity.

What the UK company is actually allowed to use

The new subsidiary trades under the group's brand, sells the group's products, runs on the group's software and publishes the group's materials. Internally it all feels like one business, so nothing is written down.

Intellectual property does not follow that intuition. Rights sit with particular legal persons, and a subsidiary is a separate legal person from its parent however the organisation chart is drawn. Where the UK company has no recorded licence or assignment covering what it uses, several things become awkward at once. Its ability to take action against a UK copyist depends on what it can show it holds, and a company that has been trading under a name with nothing in writing to support its position is a poor claimant. Any later sale of the UK business, or an investment into it, raises the same question during due diligence, at a stage when the business has very little room to answer it on its own timetable. Charges between group companies for the use of brand and technology need a basis that can be explained to HMRC, and the paperwork that supports it is far easier to create at the outset than to construct retrospectively.

The same gap opens in the other direction. A UK operation starts generating things: code, designs, photography, customer materials, sometimes the local brand assets it develops for this market. Work created by employees in the course of their employment will usually belong to the employing company. Work commissioned from contractors and agencies generally will not, absent a written assignment, whatever the invoice says. A UK entity can therefore accumulate assets the group does not own while believing the opposite, and the discovery is typically made by the buyer's advisers rather than by anyone inside the business.

The order the dependencies impose

Set out as a sequence rather than as a list of tasks, the shape of the thing becomes clearer, and it explains why several common plans stall.

Clearance of the name belongs ahead of incorporation, because incorporation is what makes the name expensive to change. The corporate structure belongs ahead of banking, because the bank asks about the structure and the people behind it. Some genuine operating substance belongs ahead of any application to sponsor, because that is what such an application is assessed against. The licence, where one is needed, belongs ahead of any assignment of a certificate to an individual, and the certificate belongs ahead of the individual's own application. Intra-group licences and assignments belong at the point the UK company starts using and creating things, rather than at the point somebody asks to see them.

Certain of those links break more often than the rest. One is an offer made to an overseas candidate, with a start date, by a business that has not yet reached the stage where it could sponsor anybody. The promise cannot be kept on the timetable given, the candidate is left holding a decision they have already acted on, and the business acquires a reputation among exactly the population it needs. Another is the assumption that people who already work for the group can be moved across on the strength of the group relationship alone. Routes exist for transferring existing staff and for sending senior people to establish an operation, and each has its own conditions about the business, the role and the individual. None of them is automatic, and which of them fits a particular plan is a judgement that depends on facts the business rarely lays out in one place until somebody asks it to.

What is not worth doing

The most expensive version of this exercise is the one that builds the whole apparatus before establishing whether the United Kingdom will support it.

A business testing demand can often do so without any of it. Selling to UK customers from abroad, appointing a distributor or an agent, or running the market through a reseller are all ways of learning whether there is a business to be had in the United Kingdom before committing to an entity, a licence, an office and a payroll. Infrastructure assembled ahead of revenue is a common overspend in inbound expansion, and it is also the hardest to unwind quietly, because closing a company that employs sponsored people is a considerably more delicate operation than closing one that does not.

Incorporating early in order to reserve the name achieves less than it appears to. It secures a company name and no more, it starts a stream of filing and accounting obligations from that day, and it does nothing at all about the question that actually determines whether the name can be used. Where the group's plans are genuinely uncertain, the work worth doing now is the work that keeps options open: understanding whether the name is available for use in the United Kingdom, and what the realistic sequence and lead times would be if the answer came back yes. That is a modest piece of work, and it is the part that cannot be usefully done later.

This guide is general information, not legal or immigration advice. Regulated immigration advice is provided with regulated partners. Nothing here is advice until terms are agreed in writing.