The reasons for forming a UK company, and doing business in the UK, with contracts drafted under UK law, are virtually the same after Brexit as before.
These are plentiful and positive; a few of which I’ve set out below. The UK has, historically been, and “remains” (if I dare use that word), a jurisdiction with a worldwide reputation of having a long-standing, strong and fair judicial system. The vote to leave the EU does not change that.
So, why form a UK company? Here are a few reasons that continue to apply:
- Limited liability – Trading through a UK limited liability vehicle, such as a company or limited liability partnership, provides the protection of limited liability. Under UK law, if the business fails, the creditors have no recourse to the personal assets of the directors (unless they can be proven to have acted negligently or unlawfully) or the shareholders
- Succession planning – As a separate entity from its owner, trading through a legal entity assists with succession planning i.e. the company continues regardless of changes in its shareholding
- Name protection – Incorporating a company is the only reliable way to protect your business name and prevent others trading on your good name
- Low corporation tax – The UK corporation tax rate, currently 19%, is low compared to many other jurisdictions
- Fair contracts – Clients and suppliers may perceive, rightly or wrongly, that the business is more stable, more reliable, even more reputable if it is in the form of a limited company and is formed in the UK under English law. As noted above, the UK has a strong reputation for having a fair and judicial legal system
- Entrepreneur Grants and Reliefs – There are numerous incentives for entrepreneurs to set up companies in the UK where it provides tax efficient investment opportunities. These incentives are not EU dependent and look set to continue – and perhaps be enhanced by the current government
Author: Debbie Farman, Managing Director, Vistra Corporate Law and Global Head of Legal Services, Vistra UK
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