UK a great choice for firms expanding abroad…a special report by Richard Morris
Data released by the Department for International Trade (DIT) shows foreign companies made a record number of investments in the UK during the 12 months to April 2016. India was the third-largest source of inward investment, accounting for 140 projects during the year. The top two spots were claimed by the US and China respectively.
Lee Murphy, founder and managing director of The Accountancy Partnership, says Britain’s attractive tax rate, strong talent pool, reliable legal system and the wealth of financial and technical support available to new firms are all reasons why overseas businesses are turning to the UK.
Mr Murphy’s accountancy firm, which has offices in London and Wirral, deals with a large number of foreign businesses that want help establishing a presence in the UK. Enquiries come from across the world, although Europe and Asia are The Accountancy Partnership’s largest overseas markets.
According to Mr Murphy, Britain’s pro-business approach is paying dividends.
He said: “In the UK things are constructed in a way that’s very business friendly. You can set up a corporation for just £15 directly with Companies House and it’s all very straightforward. The cost of entry is very low but there’s also an awful lot of information around for businesses in the UK, and I suspect that may not be the case in a lot of other countries around the world.
“We hear about the big corporates all the time but the majority of the economy is small businesses and I think we tend to cater to their needs more so than other countries.”
Along with the low administrative cost of establishing a new company in the UK, it’s Britain’s low rate of corporation tax that appeals to many foreign firms. Currently at 20 per cent, the government plans to reduce the tax rate to 17 per cent by 2020. That compares to rates of around 35 per cent in Germany, France and Spain.
Financial incentives including grants and business rates relief are available, aimed at helping small businesses get off the ground. Government-funded courses are also open to budding entrepreneurs.
According to Mr Murphy, there are also plenty of non-financial benefits to starting up a business in the UK. The language and time zone make accessing other major international markets much simpler, while the pool of available talent means finding skilled workers across a broad range of sectors isn’t a problem.
The Accountancy Partnership has recently begun working with an Italian company that offers linguistic programming courses online. While the courses are created in Italy, everything is being run through a UK company and a UK bank account. Businesses that don’t require a bricks-and-mortar presence face few obstacles.
“For businesses considering setting up in the UK, it helps if they can do things remotely,” said Mr Murphy. “For example, if they’re offering an online service or selling goods online. We’ve had clients come into our London office and they’re just amazed by how easy the process is compared to what they’re used to at home.
“The initial questions are things like ‘How do I set up a company in the UK?’, ‘How do I get a UK bank account or some sort of internet wallet?’ and ‘What’s the tax rate?’
“We’ll hold their hand through that process, set the company up for them, give them plain English guides on how the UK tax system works and the best way to take money out of the country. We’ll run the whole setup for them, even the bookkeeping.”
Staying on top of tax and financial paperwork can be a daunting task, especially for business owners whose first language isn’t English. To simplify the process, The Accountancy Partnership has created a cloud-based bookkeeping package called Pandle, available through the company’s website for free.
“One of the main benefits of Pandle is how simple it is to use,” said Mr Murphy. “Foreign clients, especially start-ups who are getting familiar with the UK system, don’t want something that’s convoluted otherwise they’ll just end up scratching their head.
“Also, if businesses are dealing with a number of currencies, the software handles that very easily. The simplicity of Pandle is a big bonus. Because the software that we’ve created is cloud based, it can be used from anywhere and we can log in and work on the same data.”
With DIT data showing that the number of overseas investment projects has risen for the last five consecutive years, the popularity of theUK as a leading centre for foreign investment looks set to grow.