How to Set Up a London Office
If you are thinking of taking your company across the pond, be prepared to give up your car, pay high rents, and leave your business cards in your wallet.
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If you're thinking of setting up shop in London, you'll be in good company – the American business community in the Big Smoke has tripled since 1999. The size, maturity and openness of the market is one of the city's (and country's) biggest draws -- and at the same time, a serious drawback. If you plan on setting up shop in the United Kingdom, you should know that you'll face serious competition.
These days, London holds particular appeal for green companies: The United Kingdom's Climate Change law is the world's first to legally mandate a 26 percent reduction in greenhouse gas emissions by 2020 and 80 percent by 2050. Low-carbon targets are also driving demand for renewable energy, low carbon, and green technologies.
And of course, London will host the 2012 Olympic Games, which promises a stack of infrastructure projects, among other growth. Some 7,000 direct contracts are available to businesses as part of the project (safety and security equipment are in particular demand), which organizers estimate will create supply chains of around 75,000 opportunities. For details, visit the London 2012 Business Network.
Here are some tips for making the Transatlantic leap.
1. First, call in the lawyers – in this case, solicitors. (Barristers, the other type of lawyer, are the ones who argue in court.) There are six legal ways to set up a company in the United Kingdom, each with its own tax and other implications. No matter which you choose, you'll be filing documents from Companies House. (For more information, click here.) Another useful reason to hire a solicitor? Besides all the legal advice, you can also ask to use his or her office address on your documents so the processing of your business registration isn't delayed. (You can change the office address once you have your own.) For help finding a solicitor, click here. Another useful port of call: ThinkLondon, a nonprofit which promotes the city for business and investment. The organization can offer free advice on business registration and the practicalities of set-up, as well as visa guidance and office location help. And yes, they can also help you find a solicitor.
2. Speaking of taxes, the tax year in England runs from April 6 to April 5. On arriving in the London, you're required to submit a P86 – also known as an arrival questionnaire – to Inland Revenue, which will use it to determine how you should be taxed. Hint: Call the solicitor before you file it. (For help, click here.)
3. To open an office in the United Kingdom, Americans need a business visa. Entering the country on a six-month tourist visa – which is granted free and almost automatically to U.S. citizens at the airport – is not recommended. It may seem like the easiest route if you're planning to employ Brits to run the office once you have it up and running, but it may cause problems if you need visas in the future. You may want to consult an immigration lawyer.
Which type of visa? The Home Office website is extensive but confusing. "It's like going into a sweet shop – there are so many different categories," says Margaret Burton, Deloitte's director of Global Employer Services. "It's all there but it can take some work finding it."
Most British business visas are granted on a points-based system that takes into account education, previous earnings, age and U.K. experience. The entrepreneur visa seems the most logical, but there's one seriously stiff requirement: £200,000 (about $300,000) in the bank. Later, you'll need to show that the business was registered within three months of your entry to the United Kingdom, and has created two full-time positions for at least 12 months. For more details, click here.
To escape the funds requirement, there are two other visas you may want to use: sole representative or highly-skilled migrant. The sole representative visa requires that the applicant be a senior manager sent from the head office. The highly-skilled migrant visa doesn't actually require any company affiliation at all – only that the person be able to support themselves in the United Kingdom.
For any type of visa (except tourist) you'll need to go in person to supply the Home Office with biometric data: a digital photograph and fingerprints. Luckily, you don't have to trek to the embassy or even the nearest consulate for this – the British government has contracted with a visa services company called Worldbridge that has some 130 visa centers throughout the US. Click here for more information. The company cannot advise you about your application – it can only process it. The U.K. processes most visas within 3 weeks, but some can take as long as 12 weeks.
4. Opening a business bank account in Britain is harder than you think. All company directors are required by law to be present at the bank on the appointed date, plus there is a raft of documents to submit, including a U.K. Certificate of Incorporation and a Certificate of Good Standing, both of which have their own waiting periods to acquire. (For more information, click here.) A letter of introduction from your American bank, particularly if you have a long history with them, may be helpful.
5. Office space in London is the second most expensive in the world, according to a Cushman & Wakefield survey released in February. In London's prime West End, rents are about £75 ($114 at press time) per square foot, and in the City of London (the city's financial heart), they're about £44 ($67) per square foot. If the thought of paying rent in London isn't leaving much breathing space on the balance sheet, you may want to consider serviced offices.
