How to Open a Subsidiary Company

How to set-up of a subsidiary company in the UK: expansion into the marketplace is best achieved by registering a subsidiary company. Subsidiary companies are often taken more seriously than establishments, because they are perceived to have a weightier, more permanent presence. Given that they are seen as a stand-alone company, separate from their parent company, they are required to file their own accounts to Companies House.

If account documents with the correct accompanying statement is not filed with Companies House by the due date it is considered a criminal offence and those named as directors will be at fault.

The inconvenience of filing separate accounts is outweighed, however, by the advantage of an increased willingness on the part of other UK firms to do business with them. They will have an accounts and sales platform that is familiar to other entities in the UK and this alone will encourage more trust than the establishment.

There are other benefits to registering a subsidiary organisation. The main one is perhaps the possibility of ring-fencing the business in order to protect the parent firm from failing or liability. There are tax advantages and on an internal level, you can incentive your staff by offering them shares in the United Kingdom arm of the business, without having to extend that offer to shares in the company as a whole.

In order for a subsidiary company to be registered in the Great Britain it needs to prove that it can comply with the statutory regime for corporates. It will need to maintain the private company's statutory registers, comply with the Companies Act 2006 and also file accounts for Companies House. There is an application form for opening a subsidiary company that will need to be filled in, but before its tax position can be assessed, there needs to be a decision about the tax residency of the subsidiary.

Directors who are UK residents and who make decisions in the UK, will mean that the subsidiary will be tax resident in the Great Britain. However, the more likely scenario is that the decisions for the subsidiary will be taken by directors at the parent overseas corporation, and that the subsidiary will be tax resident abroad.

As this is a very complex area, it is important that you receive professional advice. Coddan is a professional UK company formation agent that knows the ins and outs of every possible tax residency scenario, not to mention the most efficient methods to incorporate any given business. Our highly-skilled and helpful team will not only advise you on the details for your individual company's application, but also submit the paperwork for you as well.