Top 10 challenges of doing business in the UK

Despite the obvious appeal, companies entering the UK market can face complicated and disparate laws, tax brackets, and other bits of red tape – not to mention the potential implications of Brexit.

The UK is one of the world’s leading business locations, based on the World Bank ‘Doing Business’ survey: ranked top in Europe in terms of ease of doing business and fourth in the world. It is a proven gateway to the USD $19.9tn EU market (2017), with an unrivalled business environment and internationally competitive tax rate awaiting developing firms.

Corporation tax is the joint-lowest in the G20 at 20%, which is further reduced by up to 100% for work related to R&D, and tax on patents is just 10%.

Despite the obvious appeal, companies can find complicated and disparate laws, tax brackets, and other bits of UK red tape rather challenging, particularly with the additional requirement of navigating the potential implications of Brexit. Here are 10 key challenges you’re likely to face when entering the UK market.

1. Brexit

Brexit negotiation outcomes remain uncertain, but discussions are slowly providing greater clarity over the likely end state. Britain will begin its exit from the EU in 2019, with a transition period ahead of a full exit. The risk that Britain could leave Europe without cross-sector trade negotiations being concluded should not be discounted. If future trading relationship includes barriers to trade, then the UK economy is likely to struggle to keep pace with wider growth trends.

The UK currently reflects the norm for ease of trading across borders, with standard prices, procedure and time compared to its OECD counterparts. Preparing documents, getting customs clearance and paying for inland transportation and handling are the most arduous aspects.

2. Starting a business

A company can be formed and incorporated in the UK within 48 hours, but it takes an average of 13 days to complete all the administration, 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). Foreign businesses coming to the UK should be aware that the accounts of all UK companies are subject to public disclosure through the Registrar of Companies. Although there are little fees charged, the number of procedures can make the process quite laborious for businesses.

3. Resourcing

The UK has been known for its internationally mobile and highly-skilled workforce, as well as the favourable supply of European retail and hospitality staff.  Since the Brexit vote, however there has been a marked reduction in Europeans applying to UK retail and hospitality roles and there are limited answers to questions from the highly-skilled workforce about their future rights once the UK leaves the European Union. Working with TMF Group to fulfil your support staffing needs can ease your entry into new markets.

4. Construction permits and registering property

Construction is relatively streamlined 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. However, registering a property is the most arduous task of setting a business up in the country, according to figures from the World Bank and International Finance Corporation; taking six procedures and around 22 days.

5. Getting electricity

UK Power Networks handles electricity connections and can take up to 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.

6. Getting credit

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.

7. Protecting investors

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.

8. Paying taxes

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. Having local tax support can be crucial.

9. 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 on average around 440 days to enforce a contract and one year to resolve insolvency - both under the OECD average.

10. Cultural barriers

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. Ideally, business introductions are initiated through a connected third party. In older companies, business still centres around the ‘old boy network’ with schools, universities and family ties being important. Newer companies are more progressive.

Talk to us

TMF Group has the local knowledge to help you identify and face any challenge or opportunity for your business. Whether you want to set up in the UK or just want to streamline your UK operations, we can help.

Get in touch with us today or learn more about TMF UK.