Common mistakes US businesses make when setting up in the UK

For US firms expanding internationally, setting up in the UK is often the obvious next step: same language, similar hard working talent and the gateway to Europe. But for every similarity, there are many complex differences your HR and finance teams will need to understand. 

For tax, accounting, employment and compliance requirements, it is essential you draw on expert local knowledge from the start. With more than 20 years' experience of helping US firms set up in the UK, our Foreign Direct Investment team has seen every mistake you could make and can help you avoid these. 

Here is our list of what to look out for, and where other US businesses have gone wrong in the past. 

We can help

Our Foreign Direct Investment team knows how critical it is to get expansion plans right first time. We can provide expert advice to ensure you have the right long-term solution.

Contact us to discuss your business.

‘We won’t need a local statutory audit of our financial statements’

Just because the parent company financials are being audited, does not mean the local financials do not need to be. While this area isn’t necessarily cut and dry, what should you be aware of?

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'Our US team can handle the UK bookkeeping'

Is it possible to maintain UK bookkeeping from your US headquarters and do the UK VAT compliance yourself? Read our article to understand the nuances you should take under consideration.

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‘We’ll hire our first UK employee as a contractor and assume this won’t have any tax implications for our parent company’

If you hire your first UK employee as a contractor, what are the tax implications for an overseas parent entity?

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‘We can terminate UK employees’ contracts simply by having a frank discussion’

Terminating employees is never easy, but it’s important to follow due process. Read our article to see the difference between US and UK legal employment practices

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‘We can issue US-style 'at will' contracts to our new UK hires’

What are some of the differences between UK and US employment requirements? How can you ensure your contracts for UK employees adhere to UK law?

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‘If we send US employees to the UK, they can stay on the US payroll’

If you send a US employee to the UK, don’t assume you can avoid all UK fillings by just keeping them on the US payroll.

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'If we send a US employee over to the UK, they won’t need a visa’

If you’re looking to sending an employee over to the UK to set up a new team, have you considered the immigration or income tax implications?

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‘We’ll just mirror our US benefit offerings in the UK’

For US companies expanding in the UK, you can’t mirror your US benefits globally. Why is this?

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‘Our US parent company will just sign the UK lease’

When expanding into the UK, what should the parent company should be wary of before signing an office lease in their name?

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‘We can register our UK payroll in the name of our US parent entity’

It might seem strange, but if you’re setting up a UK subsidiary what name should you register your payroll under?

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‘We’ll hire through a global employment partner, so we don’t need to worry about UK corporate taxes’

Hiring in the UK via an Employer of Record may not mitigate your corporate tax liability. Read our article to understand the benefits and risks.

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‘We’ll offer stock options to our UK employees directly out of our US plan and assume the grants will qualify for favourable tax treatment’

As a US company expanding into the UK, the stock options offered to US colleagues typically won’t have the same tax benefits for UK colleagues. How can make granting options more tax efficient?

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‘We’ll grant UK employees stock options through an EMI subplan but won’t need to inform the UK tax authority’

When implementing an EMI stock option plan what are the two key steps most often overlooked?

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‘We’ll grant stock options to our UK employees and assume there is no social security charge for us’

What are some of the tax ramifications you should be aware of if you have grant stock options to your UK employees?

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‘We have heard of UK VAT but assume it’s the same as US Sales Tax’

UK VAT and US Sales Tax are not the same. For US businesses looking to set up in the UK, this is an important distinction to make. But why is this?

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