If setting up a business in the UK  is one of your plans for 2021, having more information could be helpful!

In this blog, I have explained some of the methods that non-residents could set up their business in the UK.

Setting up a permanent establishment in the UK.

A permanent establishment is defined as a fixed place of business through which the business of an enterprise can be carried on.

This permanent establishment does not have a legal entity of its own.

It just acts as an extension of the business already running in another country.

The place could be a branch, an office, a factory, a warehouse, a workshop, a mine oil gas well.

An individual that acts as an agent that habitually plays a principal role in the conclusion of contracts could also be treated as a PE.

Also, a building site or construction or installation projects that last more than 12 months could be treated as a permanent establishment in the UK.

Major features of a permanent establishment.

• There must be a FIXED place of business or a fixed or regular arrangement set in place
• This fixed place of business must have a certain degree of permanence
• The fixed place must be used for productive purpose.
• This place must always be available for business and at the disposal to carry on the business
• The business must also have effective power to use this place regularly as they wish.

The tax consequence of setting up of Permanent establishment(PE) in the UK.

At times determining if a business has set up a permanent establishment in the UK can be blurry.

The reason is that when a PE has been set up in the UK all the profit attributed will be taxable in the UK.

When attributing the profit to the PE, the amount must be made as if the PE was distinct and a separate entity that is engaged in the similar activities under similar conditions dealing wholly independently with the nonresident company of which it is a PE.

To be able to treat PE as a separate entity, under the UK domestic law, the PE can follow the arm’s length principle in calculating the non -resident company’s chargeable profits.

The enterprise would still have to declare this profit in their country of origin, however, they could claim double tax if available in their country.

How to set up a PE in the UK.

To set up a permanent establishment in the UK, Kindly follow the steps:

1. Within the first month of trading as a permanent establishment in the UK, you would have to register with the company house.
2. They will have to send a completed form ‘Registration of an overseas company in the UK and the allocated fees.
3. An overseas company will also have to produce additional documents such as certified copies of the companies constitutional documents. Also, they must attach a copy of the company latest set of accounts
4. If these documents are not written in English, the overseas company will have to produce a certified translation in English for the document submitted.
5. The overseas company must also provide the following details :

• The UK establishment name, address or business activities.
• The details of directors, secretary or persons authorized to accept service or represent the company.
• And all the form has been duly signed by all the officials.

Conclusion.

Thanks for reading this blog, I hope it’s been helpful.

If you are planning on setting up  PE  in the UK  and would need more advice, you can contact me.