Should I open a branch or set up a company?

Should I open a branch or set up a company? There are tax advantages to operating as a foreign branch in that branch losses can usually be offset against the parent company profits. However this does require filing of the parent company's accounts in the UK. Setting up a company is a better route commercially and is not as onerous as in say Germany. A company can be bought 'off the shelf' for a few hundred pounds with issued share capital of as little as £2.

How quickly can I set up my company's bank account? A new company bank account can be set up in the UK in as little as five days. There are certain formalities to be met but at least one major bank has a streamlined process utilising on-line application forms.

What is UK Value Added Tax? (VAT) UK VAT is similar to a US sales tax in that it is levied on sales (outputs). VAT suffered on purchases and expenses (inputs) is set off against output tax and only the net amount is paid to the government (i.e. tax on the value added). A trading entity must register if its turnover is expected to be more than £70,000p.a. In a start up situation, or when trading as a branch operation and carrying out marketing activities only, there may be expenses but no sales. In this case (provided the company is VAT registered) the input tax can be reclaimed from the government. The standard rate of VAT is 17.5% so the additional cost (if not reclaimed) can be significant.

A brief and simple guide to UK VAT has been compiled to help further questions