The UK is as an attractive market for many overseas businesses forming a holding company. Special Purpose Vehicles ("SPVs") are also set up in the UK for joint investments into specific projects, often where investors want to speak with one voice.
The UK is chosen for forming a company because of its low tax environment for non-UK investors and its high reputation for corporate governance, well-developed legal system and its holding company regime.
Dixcart can help clients with UK domiciliation services and professional director service needs. Our directors are UK resident, professionally qualified accountants and lawyers.
As directors, we are mindful that we must manage the companies under our control and ensure that they remain legally compliant and solvent. When acting as directors, we have a duty of care to do our best to benefit the company.
- Taking advice to determine the company's strategy and policies.
- Monitoring ongoing progress of those strategies and policies.
- Accounting for the company's activities to relevant parties, including shareholders and authorities.
Appointing a UK Director
Clients typically appoint us because they initially do not have the resources in the UK to provide the management and control of the proposed company in the UK. If management and control were to be exercised from a client's home jurisdiction there would be a danger that the jurisdiction would seek to tax the profits of the UK company.
The question therefore is: where is a company managed and controlled, and what factors will tax authorities consider when accessing where management and control rests?
The central management and control of a company would normally be the place where directors meet to manage the company's business. Generally, this is the place where board meetings are conducted. This is only relevant if central management and control is in fact exercised by the directors in those meetings. It is essential to show that directors have authority and make independent and informed decisions concerning the central business policy of the company and not seen to be 'rubber stamping' decisions of others.
As a result, it is important foreign shareholders appoint UK resident directors who are aware of these risks and ensure that they carry out their duties correctly, but also properly minute and evidence their actions, in order to be able to demonstrate management and control in the UK, if called upon to do so.
Where a UK entity is being used as an SPV for a number of different shareholders, we are often appointed because the shareholders want independent directors to run the company, who will familiarise themselves with any shareholder agreement, and ensure that the controls and mechanisms put in place to govern the relationship between the shareholders and protect minorities, are observed.
Dixcart directors are supported by a team of professionals enabling us to provide a complete business management and administration service. This includes:
- Company formation and secretarial services;
- Book-keeping, accounting and tax compliance services;
- Serviced office space;
- Telephone answering and email services;
- Human resource services, including help with recruitment, employment contracts and payroll services;
- Immigration services to help clients who wish to recruit or transfer staff to the UK from abroad.
Clients wishing to establish a business in the UK are advised to contact Dixcart at an early stage so that we can get a comprehensive understanding of the proposed business. This will enable us to give relevant pre-arrival advice and demonstrate how our directors would add value, should you decide to form a company in the UK.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.