Mapping the landscape of UK inward investment in 2021
Despite the historic challenges posed by both Brexit and the global pandemic, research suggests the UK is continuing to attract significant levels of foreign direct investment (FDI) across a broad span of industries.
A recent survey published by This Is Money shows that the UK is now the second-most popular country for inward investment in Europe, ranking closely behind France. In terms of cities, London once again takes the top spot as the most popular European destination for FDI, regaining the title from last year’s winner, Paris.
But that’s not quite the full story. A closer look at the statistics shows that France has seen foreign investment projects shrink by 18% since 2019; whereas the UK has weathered the storm rather better, with just a 12% decline on the previous year. Considering the tumultuous events of the past 18 months, this is a promising sign of economic resilience for prospective UK investors. It’s also likely that inward foreign direct investment (FDI) interest has been buoyed by the comparative success of the UK’s vaccine rollout and wider plans for recovery.
UK foreign direct investment trends show that momentum appears to be building as investors regain confidence and look to capitalise on new opportunities, not just in London but also in key regions such as the North West and East of England. Digital technology, life sciences, food, transportation, and logistics are among the industries performing exceptionally well despite the difficulties posed by the pandemic.
Here at Gerald Edelman, we’re noticing renewed interest in our International Tax services and Deal Advisory services, both of which factor greatly throughout the UK foreign direct investment process. With that in mind, let’s take a look at a few of the main areas in which we tend to support businesses when moving their operations to the UK.
Setting up a UK business from overseas
Business owners and entrepreneurs looking to establish a UK presence have a number of options when it comes to structuring their expansion and inward investment strategy. Two of the most common routes are to set up a branch or a subsidiary, each of which has its own set of legal and filing obligations.
A branch – also known as a permanent establishment – is a direct extension of the parent company that serves a specific geographical region. Here, the overseas parent company and the UK branch are classed as the same legal entity and share liability for all operations. The parent company is therefore required to file their full overseas accounts with Companies House. Only the profits attributable to the UK branch will be subject to UK corporation tax, although losses can also be offset against the profits of the overseas parent company.
A subsidiary is different in that it’s classed as a separate legal entity with limited liability from the parent company. Subsidiaries are only required to file their own consolidated accounts with Companies House, not the annual accounts and financial information of the parent company. Any subsidiary that is classed as tax-resident in the UK will also be required to pay UK corporation tax on its worldwide profits.
It’s worth noting that all UK companies and LLPs must prepare and submit an audit of their accounts with their year-end financial statements unless they qualify for an exemption. In the case of a branch, if the parent company is required to prepare and file an audit in their country then a copy of this must be submitted to Companies House.
How Gerald Edelman can help
Gerald Edelman works with global entities who want to establish a business in the UK and offers a wide range of services that simplify the legislative and regulatory complex requirements when considering the best financial vehicle for their UK operation, ensuring that our clients remain compliant and tax-efficient.
We are founding members of XLNC a worldwide association of independent accounting, law, and management consulting firms, that enables us to operate seamlessly across borders, serving our clients’ cross-border requirements with confidence, multi-jurisdictional expertise, and efficiency.
Gerald Edelman has worked with businesses worldwide, offering a wealth of expertise in handling international tax matters for inward-investing companies of all sizes, from start-ups to large corporations, and high-net-worth individuals and their trusted advisors, across a wide range of industry sectors.
Our Partners and Advisors are experts with commercial acumen and technical expertise, helping clients overcome their business challenges, offering exceptional tax guidance and advice by supporting our clients to think beyond their limits to achieve success and strategic growth.
Assisting clients with both inward and outward investment business activities including acquisitions, disposals, and reorganisations, that are specifically suited to our client’s needs, offering them tax efficiencies, and guidance. See our full list of tax services here.
Pre-arrival tax planning
Offering our clients support and advice on residence and domicile matters, structuring of assets and segregation of funds, UK tax issues including income international tax, HMRC and legislative matters, as well as capital gains tax, and inheritance tax, setting up a UK trust, and other tax matters.
Post arrival implementation
Ensuring that our clients are compliant with all your UK tax obligations.
Establishing and structuring a UK presence, UK subsidiary or overseas companies, foreign branches, UK holding companies, profit extraction, exit strategies, cross-border transactions, transfer pricing, and withholding taxes.
VAT and customs duty
We offer advice on all VAT registration, VAT liability, and HMRC enquiries as well as more specific vat advice relating to property services and vat trade transactions, ensuring that our clients avoid costly mistakes and achieve maximum tax efficiencies.
Bookkeeping, accounting and compliance
Gerald Edelman can manage bookkeeping and accounting. We can also provide a range of audit and assurance services, along with income tax and financial reporting requirements through the latest online cloud apps, identifying cost savings and ensuring clients’ business planning is a smooth and efficient process. Plus, we’re on hand to assist with corporate governance matters.
Our transaction services team has technical expertise in due diligence, business valuations, financial modelling, and transaction structuring, which is underpinned by real experience in working on deals of all sizes.
Gerald Edelman offers a full suite of Deal Advisory services for business owners and entrepreneurs at each stage of the business lifecycle. We draw on decades of experience managing corporate deals across a broad range of industries and have built a substantial network of buyers and investors at both local and international level supporting clients in raising capital, sourcing buyers and investors, acquisitions and transactions, and exit strategies.
We can advise our clients on all aspects of HR and employee issues, including bringing employees, managers, directors and partners into the UK, and advise on relocation, tax, payroll, salaries, and pension matters, ensuring that all our client’s HR processes are handled efficiently, accurately and meeting all UK compliance, tax and regulatory requirements.
Making the right choice for your business
There are pros and cons to every business structure and your decision will ultimately depend on the current structure of your overseas company, timeframes, and the nature of your business activities.
That’s why drawing on the expertise of an experienced international tax adviser is so crucial to pinpoint the best route for your organisation. If you’d like to arrange a free consultation to talk through your current situation with one of our UK foreign direct investment specialists then feel free to get in touch via the form below.