Monarchs Glen

Not sure if this is the right spot. was thinking technical but this isn't really technical so hell, I'll post it here and if this thread gets moved, it gets moved.

Okay, so here's the deal. A friend of mine has a web design company... well, not exactly company yet as its not registered. We both live in Ontario, Canada. Now he wants to register his company and he has gotten it into his head that he can register a LTD business in the UK since it's so cheap because he's working pretty much all online.

I've tried talking him into doing it the way I did, through our local government, but he's a friend and thinks I'm just a douche and trying to cost him more money. So, I've been Googling and trying to find an answer to this but figured, hell, some of you live in the UK and might have better info that I can find.

So it comes down to this. Can he do it? Can he register his business only in the UK even though he lives in Canada and will be (hopefully) doing business globally?

He probably doesn't want to chance advice from forums, when so much is at stake

I suspect this kinda thing is fairly common with the global market we're in. Won't he still have to pay taxes off his wages and be subject to canadian employment type laws and stuff, on the assumption he never even leaves the country?

Lastly as someone who did a few years with my own Ltd company....but i found the whole having my own ltd company a massive ballache with even one countries obscure-ever-changing tax laws/guidelines let alone two countries making it complicated.

I guess our (stupid) government must be doing something right if folks are considering setting up their business here, even if just for tax breaks and such.

I second Gili's advice to speak to someone who knows better, but thought I'd provide some additional things to contemplate.

UK Companies are registered with Companies House. Although the registration fees are low, there are other things that he has to take into cosideration.

If the company is based in the UK then he will need to pay Corporation Tax to HMRC. Once it earn above a certain threshold he will also need to charge VAT to customers. This needs to be paid on all of the business done in the UK, so if he's only registered a UK company, that's UK Tax on ALL business.

On a yearly basis, two versions of his accounts need to be prepared. One formatted for HMRC, the other formatted for Companies House. This means he'll need to recruit a British accountant who is familiar with British accounting practices.

From a Pay point of view, once he earns over a certain threshold (which changes yearly), his salary would have to be paid via PAYE and go through HMRC. I'm not sure how he'd have to deal with the Canadian side of things, but his UK earnings would be treated as UK earnings, and would fall under UK Tax and National Insurance. I don't know how this would work out, but would be complicated I'm certain.

The company would also have to comply with any UK laws and regulations regarding employees etc, so he'd need to remain up to date with UK company law.

From an accountancy point of view, his books would need to be in pounds sterling. This means a UK bank account, or a very complicated accounts process with additional forms and more expense. I don't know if he can get a bank account in the UK without being resident, that's a whole other matter.

There are other things that would also need to be taken into consideration but those are some major ones that would need to be considered.

On the subject of `Can it be done?`. The Companies House FAQ pages suggest yes. Company Officers do not need to be resident in the UK, and, although a UK address is required for the company, it CAN be a PO Box.

Of course, this means the need to pay to rent a PO Box and also pay to have all mail sent to it (including junk mail) forwarded internationally. An alternative would be to use his accountants address, which may or may not work out a cheaper option.


http://www.companieshouse.gov.uk/infoAn ... ress.shtml

What is a registered office (RO) address?

All companies must have a registered office, which must be a situated at a physical location in their country of registration. It can be his business address, the address of his accountant or any other address he choose. However, it must be an address at which he will be able to deal with all official letters and notices that he receive.

Can a PO Box be used for the registered office address?

Yes, provided the full physical address is given including the postcode.

http://www.companieshouse.gov.uk/infoAn ... Comp.shtml

Is there a requirement that subscribers or officers of British limited companies be resident in the UK?

No. Subscribers or officers may be resident outside the UK.

Id be interested in hearing why he thinks incorporating in the UK is a good idea....... and why he is looking to go down the limited route in the first place. If he is thinking about doing it with a view to going public then I could understand him looking at the UK and the AIM market in particular (aka casino) but otherwise I think he is mad..

I think he was just thinking it was cheaper IMHO. He says its because all the work he does is online anyway (web design, art work, etc) that it shouldn't matter where he registers his business

If its cheaper id be amazed if it isn't purely due to the weak pound (barring ridiculous costs in Canada) - for a one man band (I assume that's what he is) I think he would be crazy to register outside his country of domicile.

I thought everyone in europe done there business from Ireland for the lesser corporation tax.

My personal experience from my ltd company and dealings with HMRC i'd take whatever options minimises complications(as in, setup business in your home country )