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The UK is one of the world’s leading business locations and the number one destination for inward investment in Europe, but growing businesses still face several hurdles when expanding in the country.
The UK is one of the leading business locations in the world and the number one destination for inward investment in Europe. Its attractive business environment is at the core of its success, but companies still face several challenges when diversifying their operations in the country.
Expanding businesses are generally looking to move into an open market with good access to neighbouring regions and a healthy supply of skilled labour, research and development and a return on investment for the long term. The UK offers these attributes and more.
A proven gateway to the $17 trillion European Union market, there is an unrivalled business environment awaiting developing firms with an internationally competitive tax rate. The current corporation tax rate will have dropped to 20% by 2015, and innovative companies are able to benefit from an additional reduction in corporation tax through the upcoming ‘Patent Box’ initiative and through recent enhancements to the UK’s generous R&D tax credit scheme.
Despite the obvious appeal, companies can find traversing complicated and disparate laws, tax brackets, and other bits of red tape rather challenging, which is why having local help on board can make a big difference if the business is to succeed.
Starting a Business
It takes an average of 13 days to start a business, with the lion’s share of that time spent dealing with Her Majesty's Revenue and Customs (HMRC) and registering for a withholding tax on incomes called PAYE (pay-as-you-earn). Although little or no fee is charged, the number of procedures can make the process quite laborious for businesses.
Dealing with Construction Permits
Construction is a relatively streamlined procedure in the UK, taking under 100 days and requiring only nine procedures. Obtaining planning permission from the relevant authorities and getting water and sewerage connection takes the longest time and is the most costly element of the procedure.
UK Power Networks handles electricity connections and can take over 100 days to complete proceedings. This involves submitting plans, obtaining inspections and waiting for the external connection works to be carried out. Choosing an electricity supplier with the best rates for you can also be a minefield.
Registering a property in the UK is the most arduous task of setting a business up in the country, figures from the World Bank and International Finance Corporation show. Taking six procedures and 29 days, the most time-consuming tasks are conducting searches on the property and relations with the buyer’s solicitor.
The UK ranks number one in the world in terms of ease of getting credit. The robust financial sector and diversified nature of acquiring credit gives start-ups and developed businesses good access to much needed funds. However, knowing which type of credit will suit which business is a daunting task and often requires assistance.
Solid treaties and a robust financial climate means investors are well protected in the UK, although it is always worthwhile taking out assurances and doing due diligence when expanding into the country.
The tax system in the UK is notoriously tricky, largely because the country’s legal system has been adopted in a piecemeal fashion. It takes around 110 hours per year to complete the necessary tax obligations, which can involve anything from corporate and labour charges to environmental and sales taxes.
Trading Across Borders
The UK is around the norm for ease of trading across borders, with standard prices, procedure and time in comparison to its OECD counterparts. Preparing documents, getting customs clearance and paying for inland transportation and handling are the most arduous aspects.
Enforcing Contracts and resolving Insolvency
Enforcing contracts and resolving insolvency are both relatively seamless processes thanks to the developed nature of the UK’s legal system. It takes just under 400 days on average to enforce a contract and a year to resolve insolvency, both under the OECD average.
The British often come across as quite reserved and distant at first, and it can take some time to get down to the nitty gritty elements of business proceedings. Time is an important factor, although reaching a decision can be a slow and laborious process involving many layers of people and bureaucracy.
We have the local knowledge to help you navigate these minefields. Whether you want to set up in the UK or just want to streamline your UK operations, talk to us.