Trading in the UK. Driven by results

Transcription

1 Trading in the UK Driven by results 1

2 A guide to trading in the UK This short guide outlines the main areas for consideration when establishing a business presence in the United Kingdom. It covers the main potential legal structures available in the UK as well as some of the key points to consider when doing business in the UK in terms of premises, employing people and intellectual property. This guide does not constitute legal advice. For tailored and detailed advice and guidance on these areas and the other specialist areas your business will require to operate in the UK, please do not hesitate to contact any member of our International Team. 2

3 How can you trade in the UK? There is no set legal structure for trading in the UK and we will assist you in selecting the most appropriate for your business intentions. The most usual options in order of formality are: Incorporating a new company Forming a partnership or, LLP Entering a Joint Venture Setting up a place of business Appointing an agent or distributor Whilst this is an important decision, it is possible to change the structure later as your circumstances change. For example, you could start by using a sales agent in the UK before incorporating a company once you have established a market presence in the UK. Different types of commercial UK companies There are a number of options when setting up a company. The most common is a company limited by shares. We find this is usually most appropriate when establishing in the UK as it has the benefit of wide ownership possibilities and its financial liability is limited. This type of company can be: Private Limited Company. There is no minimum share capital. Public Limited Company (PLC). The company must have a minimum share capital of 50,000 and shares can be bought by members of the public. Benefits of using a limited company Liability is usually restricted to the value of the shares of the company held by the shareholders, which can be as low as 1. A company is generally perceived as having a greater permanency. Profits and losses can be kept separate from the rest of your group whether in the UK or overseas. Incorporating a company To incorporate a company for you, we will require the following information from you: The proposed company name A brief description of the intended activities of the company The intended registered office address The accounting reference date or year end The share capital of the company For each director we will require: Full name Date of birth Occupation Country of residence Residential address three of the following personal details (these are needed to verify that the director is willing to act as a director) o place of birth o telephone number o mother's maiden name o eye colour 3

4 o o o father's first name passport number or national insurance number The full name of the secretary The full names of the shareholders We will prepare and file the necessary documents and typically within 1-2 days the company will be incorporated. The company s rules governing its administration are set out in the memorandum of association and articles of association. Ongoing administration A company is a more formal business entity and has ongoing requirements which include: For most companies annual accounts and reports must be sent to each shareholder and filed at Companies House. We can introduce you to accountants to prepare the accounts for you or otherwise assist. An annual return must be filed every year giving information concerning the names of directors, secretary, shareholders and the capital structure of the company. Changes in the business must be recorded and filed at Companies House. This includes the appointment of new directors/secretary, amending the company s articles of association or memorandum of association, changes to share capital and changing the company s name or registered office. The company will have statutory books that must be kept up to date and at the registered office. The name of the company must be displayed at the registered office and at every place of business, and must be in all business letters, websites, invoices, orders and other communications. 4

5 All stationery must include the company s name, its registered number, its registered office and its place of registration. Forming a partnership or LLP Partnership A partnership is where two of more legal persons (individuals or companies) work together. There are no incorporation requirements. A partnership will begin once the parties start working together. We would advise that you have a written contractual agreement in place to govern a partnership. Limited Liability Partnership An LLP is a mix of a company and a partnership. There are no directors or shareholders but it has limited financial liability and the relationship of the parties involved is contractual. The incorporation process is similar to that of a company. Establishing a branch It is possible to set up a branch office in the UK. A branch is an extension of one of your existing companies. The profits and losses of a branch will automatically belong to your company. Typically a branch will have its own identified team to represent the branches and deal with third parties in the UK. Another option is to set up what is known as a permanent establishment, which is a fixed place of business. The business can then trade from this place which of an office, a factory, a building site or a construction project. To set up a branch or permanent establishment your company must register certain details. You will be required to disclose constitutional documents, accounts and any relevant charges. Place of business It is most common to establish a place of business where your presence in the UK is currently incidental to your business as a whole or your business is structured so that it would not suit a company. A place of business is not considered to be as permanent as for a branch or company. Most overseas companies doing business in the UK will require registration as branches rather than as places of business. However, companies incorporated in parts of the UK (such as Northern Ireland and Gibraltar) will only need to register a place of business, as opposed to a branch. 5

6 Entering a Joint Venture There is no specific English Law governing joint ventures. The term can be used to describe any cooperation agreement between two (or more) parties to perform a business activity. Often we use joint ventures in research and development arrangements, such as FP7 and H20/20 projects. It is recommended to have a written agreement in place to determine each party s rights and responsibilities. Appointing an agent or distributor Often a preliminary step when entering the UK is to appoint a sales agent. The agent is appointed to seek, negotiate and conclude contracts with customers on your behalf. The arrangement can be structured so that the sales contract is made between you and the customer or that the agent buys the products and sells these on to the customer. The second arrangement is often described as a distribution or reseller arrangement. We would recommend that the arrangement is governed by a written contract. Agency arrangements have particular legal obligations, such as possible payments on termination. Legal advice should be obtained before appointing an agent as agency laws are complex. 6

7 Commercial premises Property in the UK can be secured by way of a purchase of either the freehold or a long leasehold interest in property. Alternatively, you may lease a property on a shorter fixed term basis which will mean you pay a rent (quarterly or monthly) which is based on market conditions at the time. At the end of the term of the lease you can either negotiate for a renewed lease or leave the property, depending upon your commercial and practical needs. You should always take legal advice when entering into a short term lease arrangement (and, indeed, when you purchase property by way of a long lease or a freehold) as the law surrounding property can be complex and tenants can be asked to take on some fairly onerous responsibilities - we can advise and negotiate on your behalf to ensure the arrangements are as advantageous as possible. We will also advise on the registration of your lease (as appropriate). The purchase or lease of property could attract Stamp Duty Land Tax liability and we will advise you on any duty payable and assist you with completing and submitting the return. With regard to shorter term leases it is not uncommon for tenants to be asked to provide some security for the payment of rent, particularly if the tenant does not have a UK trading record. This can be by way of a deposit of a sum of money which will be held by the Landlord as security and which can be drawn from if the tenant has not paid his rent or has committed some other breach of the terms of the lease. As mentioned above, the law of property interests in the UK is extremely complicated and tenants and buyers of property are always strongly advised to take legal advice before entering into any arrangements. The earlier a buyer or tenant appoints a lawyer, the better. 7

8 Employment When starting to trade, you are likely to need staff. Under English law employees have legal rights which include: You are required to give every employee a written statement setting out the terms of their employment There is a national minimum wage which depends on the age of the employee. There can be a limit to how long an employee can work in a week There are requirements as to providing pensions for employees You must pay statutory sick pay in certain circumstances All workers are entitled to a minimum amount of paid holiday leave There are leave periods for parents and carers Employees have protection of their employment There are flexibility requirements There are anti-discrimination laws In the UK there is also the option of engaging consultants to perform services. Typically this is in areas such as IT and accounting. Consultancy agreements can be more flexible and can avoid many of the requirements of employees but need to be carefully entered into. 8

9 Commercial issues Standard terms and conditions Most businesses operate under their own standard terms and conditions. There are few restrictions on what can be included in standard terms and conditions and common issues relate to payment terms, delivery terms and limitations on financial and other liability. There are also extra rules when trading on-line and selling to individual consumers. It is quite normal to have different terms when you are buying goods and services and when you are selling goods and services. There are rules about which party s terms apply to a relationship. You will need to take care to ensure your terms apply. It is possible to retain ownership of products sold, allowing you to enter your customer s premises and take back goods which have not been paid for. This is called retention of title and is common in supply contracts. Incoterms are recognised and widely used in international commercial contracts. Importing Customers in the UK expect to contract subject to English law and jurisdiction. Credit checks It is easy and quite normal to conduct credit checks and searches on customers. 9

10 Intellectual property Intellectual property rights are territorial and you will need to protect your IP within the UK. The main intellectual property rights recognised in the UK are: Copyright this prevents another from copying the work in question. Protection in the UK arises automatically and usually lasts for 70 years from the death of the creator. Patents in order for an invention to be patentable, it has to be new, involve an inventive step and be capable of industrial exploitation. Patent protection must be applied for and gives the owner up to a 20 year monopoly to exploit the invention. Patent protection can be secured under a European Patent. Design right a right that prevents the copying of the appearance of a product. Unregistered Design Rights are not protected for as long as a Registered Design Right. Registered Design Rights have up to 25 years protection. The UK recognises Community Unregistered Design Rights and Community Registered Designs. Trade marks can be registered or unregistered. Registration gives the right to stop others using a trade mark in connection with a particular class of goods or services. Registered trade marks are also easier to enforce than unregistered trade marks. Protection in the UK can be obtained by registration either just in the UK or as part of an EU Community trade mark. English law gives rights based on use of a mark, and not which party is first to file. 10

11 The International Team Jeremy Shulman Head of International Services Direct Line: Mobile: Dawn Carlisle Commercial Property & Portfolio Management Direct Line: Mobile: Rob Lucas Head of Intellectual Property Direct Line: Mobile: Jim Wright Employment Direct Line: Mobile: Maria Fert Commercial Property Direct Line: Shulmans LLP 10 Wellington Place Leeds LS1 4AP 11