International businesses directly employing staff in the UK need to be aware of what Companies House require. Those that do not risk legal breaches or burdening themselves unnecessarily.

Under the Overseas Companies Regulations 2009, any overseas company with a place of business in the UK must register with Companies House. However, when an overseas company’s only activity in the UK is to employ staff who work from home, it is difficult to determine if there is a need to register. In this article, we provide key questions to help you assess if your overseas company needs to register at Companies House. The term “overseas company” refers to any company incorporated outside the UK. We use this term because it aligns with the language used in the Regulations.

What do the Regulations specify?

The Regulations state that an overseas company needs to register at Companies House if it has a place of business in the UK. A place of business is any location where the company regularly conducts business. It necessitates a physical presence in the UK. Historically, determining if an overseas company met this test was straightforward, as employing staff in the UK often meant securing premises for them to work in. However, with advances in remote working, this is no longer the case. Many overseas companies now have UK employees who work permanently from home, making it difficult to determine if the overseas company has a place of business in the UK. This matters because the Regulations exist to ensure that any overseas company with a place of business in the UK is subject to an equivalent level of disclosure as a company incorporated in the UK. An overseas company will burden itself with unnecessary compliance if it registers when it does not have to. Conversely, failing to register when needed will result in serious breaches of the Regulations.

Consider these questions to determine if you need to register at Companies House

1. Consider your employees’ roles and responsibilities. How senior are those roles? To what degree do they engage with customers, suppliers, regulators and other third parties in the UK? Do they enter into contracts on behalf of the overseas company?

2. Consider the locations from which your employees work. How fixed or definite are those locations? How long will activity be carried out at those locations? Could any of the locations be considered to be “at the disposal of” the company?

3. Consider your communications with customers, suppliers, regulators and other third parties. In those communications, do you indicate that the overseas company has a presence at a particular location in the UK or may be contacted at that location?

4. Consider your global operations. Where else does the overseas company have a place of business? How does the activity conducted in that place compare to the activity in the UK?

Compliance with tax and UK employment law

The Regulations are separate from the rules governing the creation of a UK permanent establishment for direct tax purposes and a UK establishment for VAT purposes. You also need to consider the UK tax legislation to determine if the overseas company has corporation tax and/or VAT reporting requirements. In addition, UK employment law applies to anyone employed in the UK. This means that a contract of employment, which an employee has a statutory right to receive on or before their first day of work, must be compliant with UK employment legislation. You should also ensure employees have the right to work in the UK.

Buzzacott can help you comply with the Regulations

We often witness international businesses incurring additional costs by addressing this matter too late. Seeking advice early in the process can save both costs and management time for overseas companies. If you are planning to employ staff in the UK who will work permanently from home, Buzzacott can provide a bespoke analysis and recommend a course of action that will help you safely navigate this complex area.