The UK as a Business Location for MENA Companies

Katherine Evans | Senior Partner
8th January 2020.

Brexit has given a perception to the world that the UK may no longer be open for business to the world, but the reality is that the UK remains a highly business friendly location for MENA headquartered corporations to set up their European operations.

To start with, it is easy to set up a company, whether you do this yourself online through the UK Companies House website, or use a company formation agent, or a firm of lawyers or accountants. The process can literally be completed in under half an hour provided that all the information is to hand. You will need to provide details of the shareholders and directors, the number of shares in the new company, the denomination of those shares (typically ordinary shares, each with a nominal value of one pound sterling), a UK registered office address for notices, and the ability to identify your business area by reference to a fairly comprehensive list of codes covering all the key business markets.

There is also a requirement in the online formation procedure to identify individuals with “significant control” over the new company. Typically persons with significant control will be one or more of its directors, or any shareholder holding more than 25% of the shares. However, the individual(s) or corporation(s) with significant control might not hold any shares or a directorship but they will still need to be identified in the formation documentation. Your chosen advisers will be able to give advice if you have any concerns about who may or may not need to be disclosed. For businesses new to the UK market from MENA with no existing contacts in the UK, your chosen adviser will also need to provide a UK registered office address for your new company.

There are certain businesses in the UK which require a separate business licence to operate but relatively few vs other jurisdictions. Taxi companies, food outlets, hotels, pet shops and hairdressers require additional licences in order to trade legally. Telecommunications companies must operate within the scheme set out by the Communications Act 2003, but unless they are using restricted spectrum or operating satellite services, no additional licences from the UK regulator, Ofcom, are required.

In terms of taxes, the UK has one of the lowest corporation tax regimes in Europe (at 19% now, and with proposals to reduce that to 17%). Companies are not required to register for VAT until they have turnover of at least £85,000 (2020-21 tax year) held from the previous 2019-2020 tax year. On the other hand, if registering for VAT is useful to a company prior to reaching this threshold, it has the ability to register voluntarily at any point after incorporation. VAT returns need to be made on a quarterly basis. The returns have a simple standard format and can be filed either by the company directly or by your accountant.

Employment laws in the UK are amongst the most, if not the most, flexible in the whole of Europe. Although anti-discrimination laws apply from day 1 of employment (together with the right to be paid agreed wages without unlawful deduction), the right generally to claim unfair dismissal does not arise until an individual has been employed for two years. There are obligations on employers to pay national insurance contributions and to deduct income tax at source from employee wages, but there is free software available from the UK Department of Trade and Industry (“DTI”) website to make this easy if you choose not to arrange for your accountants to provide this service to you. There is also an obligation to provide a statement of key employment terms to all employees. There is guidance on the DTI website about what must be included but your UK lawyers will able to provide expert guidance on this and all other UK labour law issues.

If you are thinking of setting up a business in the UK, please do not hesitate to contact us. We specialise in supporting businesses from the MENA region to do business using the UK as their European hub, and have excellent contacts with accountants and corporate services firms, including companies able to help with the set up of UK bank accounts for foreign nationals.

First published in IR Global – Meet the Members | MENA

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