Overseas companies registered in the UK

Explore the relevant accounting and tax implications

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Today’s world is a one big economy and it is very easy to set up new business structures across different territories. Overseas companies that are registered in UK have certain compliances to meet per UK legislation for Companies House and HMRC.

What is an overseas company?

An overseas company is defined under company law as a company incorporated outside the UK (Great Britain and Northern Ireland). If it ‘opens a UK establishment’ it must register with the Registrar of Companies under the Overseas Companies Regulations 2009, SI2009/1801. The concept of UK establishment is based on former ‘place of business’ and now includes a branch as defined under the EU 11th Company Law Directive.

Companies House has produced extensive guidance to highlight the obligations for overseas companies and has provided detailed guidance on:

  • how to register an overseas company that opens an establishment in the UK
  • disclosure obligations after such a registration
  • documents you must send to Companies House
  • important rules on accounting requirements, company names and trading disclosures.

European Economic Area (EEA) companies

The UK is no longer part of the EEA. This means companies with a registered UK establishment, and whose ‘home’ country is inside the EEA, must now report the same information as overseas companies.

Which accounting standards to use?

An overseas company that must prepare, audit and disclose accounting documents under parent law must deliver them to Companies House within three months from the date the documents are required to be disclosed in accordance with its parent law.

Accounting documents include the accounts of the company, annual report, auditor’s report and director’s report.

You must file the accounts with a form OS AA01 containing:

  • the legislation under which the accounts have been prepared and, if applicable, audited
  • whether the accounts have been prepared in accordance with generally accepted accounting principles and the organisation which issued the principles
  • whether the accounts have been audited and if so whether they were audited in accordance with generally accepted auditing standards and the organisation that issued them
  • if there has been no audit, whether the company is required to have its accounts audited
  • if the company has subsidiaries, it must also supply a copy of the consolidated accounts.

Where companies are not required to prepare and disclose accounting documents under parent law, these companies must still prepare the audited accounts and file these with directors’ and auditor’s report as it would if it was formed and registered under the UK Companies Act. The period covered for these accounts would be as set up based on their accounting reference date allocated by Companies House.

You can find detailed requirements for accounts, which include:

  • calculation of a financial year (normally 12 months), accounting reference period and accounting reference date
  • individual or group overseas company accounts must be prepared in accordance with the company’s parent law (provided the content of such accounts meets the requirements set out in the Overseas Companies Regulations 2009); in accordance with international accounting standards or the requirements detailed in the Overseas Companies Regulations 2009/1801
  • the accounts must be approved by the board of directors and signed on behalf of the board by a director on the company’s balance sheet
  • the directors of the company must deliver accounts to Companies House within 13 months of the end of the relevant accounting reference period unless it is the company’s first accounting reference period and adapted rules apply as set out in the Overseas Companies Regulations 2009/1801.

Tax filing obligations for overseas companies

Under FA98/SCH18/PARA3 (1)(b) HMRC may require a return and accounts relevant to the tax liability or to the application of the CT Acts to the company. For company accounts HMRC’s requirements are limited to the information required by the Registrar as stated above. More guidance can be found in HMRC manual CTM93240.

You may find ACCA’s Guide to managing overseas business relationships useful if a UK business is intending to set up business overseas.