UK Branch Office

A branch is one way for a company to set up a business in UK. Opening a branch has many drawbacks, mainly that the foreign parent carries full liability for the branches operations and that lengthy and complicated dealings with the tax authorities may be needed regarding the branches tax obligations.

Opening a UK Branch of a Foreign Company

The disadvantages of a branch office are:

• The parent company is fully liable for the liabilities of the branch
• The representatives of the branch may be held jointly and severally liable for tax debts
• The financial statements of the parent must be lodged at the Companies Registry
• The obligations of the branch are the same as those of the parent, including filing VAT returns, employee returns and corporation tax returns - meaning that there are few savings in administering a branch
• Banks and clients may prefer dealing with a UK company rather than a foreign branch
• A branch is rarely ideal for substantial projects because the parent company runs the entire risk
• Upon registration of a branch, evidence of the legal existence of the parent has to be provided
• Any public act by the branch is likely to need ratification by the board of the foreign parent.

In terms of administrative ease, if your company is to sign contracts in front of a notary on a regular basis, it makes more sense to form a new one rather than establish a branch office.

The advantages are:

• Less obligations to present accounts than with corporations

Features of a branch office in UK

A branch is usually an adequate vehicle for low cost projects. However, it is not the ideal choice for substantial projects because the parent company and branch offices activities are not differentiated - the parent company is fully liable for the liabilities of the branch.

From a tax point of view, branches are permanent establishments of non-resident companies and a UK branch is not a separate legal company from its parent.

The branch must have the same name as the parent company.

A branch of a non-resident company must appoint a resident individual or a company to represent it in its dealings with the tax authorities. The representatives may be held jointly and severally liable for the tax debts of the permanent establishments of non-resident entities, which they represent.

To register a branch, evidence of the existence of the parent has to be provided, as well as certified copies of the Articles or Statutes, the names of the directors, the share capital, the registered office, and the names of the representatives who will act for you.

Various documents will need to be translated, including:

• your parent company's registration certificate
• your company's articles of association
• the names of the company's directors and secretary

After your branch is registered

All stationery, order forms and similar documents used by your branch are required to show: 

• The place of registration of the parent
• The number with which it is registered
• The legal classification of the company

• The address of its registered office

• The place of registration of the branch, and its registration number

Also, the following particulars must be shown at the branch office:

• The company name
• The name of the country in which the company is incorporated
• The parent of the branch has limited liability

What financial information must be sent to Companies House by oversea companies registered in Great Britain?

Branches of overseas companies whose parent law requires the publication of accounts which have been audited must deliver a copy of those accounts together with a certified translation (if necessary) within three months of public disclosure. This applies to all companies from European Economic Area (EEA) member States, even where a company is categorised as 'small' and allowed to deliver modified accounts, even to the extent of them being unaudited.

Branches of oversea companies whose parent law does not require the publication of audited accounts must, within 13 months of a company's accounting reference date, deliver accounts to Companies House that comply with the Companies Act. Such accounts must relate to the company and not solely the branch.

All overseas companies must deliver accounts - there are no exceptions. The accounts must relate to the company as a whole and not just that part of the company that operates in Great Britain.