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Companies registration in United Kingdom

The United Kingdom of Great Britain and Northern Ireland, commonly known as the United Kingdom (UK) or Britain is a sovereign state in Europe, lying off the north-western coast of the European mainland. The United Kingdom is a unitary state under a constitutional monarchy. Its capital is London.

Contemporary English legislation acknowledges two types of companies in UK which represent the greatest interest for incorporation. This is Limited Company (LTD) and Limited Liability Partnership (LLP).

Limited Liability Partnership

UK law allows the registration and manage the companies with a zero rate of taxation - Company LLP (Limited Liability Partnership Act 2000).

Company LLP is a partnership that must have at least two founders. Under UK tax law, Company LLP is not treated as a separate subject of taxation (LLP is not required to obtain a tax registration number in the UK), and taxes on the profits must pay companies founders (Designated Members), depending on the jurisdiction of their residence, in the proportion of their interests (shares) in LLP. If the founders possess the classic offshore companies, they are not obliged to pay taxes as well.

Limited Liability Partnership (LLP)  does not have a director, company is managed by designated partner.

Limited Liability Company (LTD)

The UK has excellent reputation in the business world and is not an offshore jurisdiction. Limited Liability Companies are subjected to taxation and obligated to supply these reports:

·        Annual Return - contains information about the legal address, the partners and the company's governing bodies (supplied every 12 months to file a report given to 28 days).

·        Annual Accounts - contains information about the company's financial performance. The first report must be filed within 10 months from the end of the reporting period. The reporting period is defined as the end of the month following the end of the calendar year from the date of incorporation.

·        Tax Report - the company is obliged to deliver a report in compliance with the tax laws. If the company had no activity and provides Dormant Accounts - tax report is not required.

For late filed reports significant penalties are accrued.

Corporation tax (tax on corporate profits).  The tax rates are set annually by the budget law of the country. The fiscal year in the UK begins on the 1st of April and ends on the 31st of March of the next (following) year. On the 1st of April 2015 budget law has set a 20% corporate tax rate.

From the 1st of April 2015 the UK introduced a new tax - diverted profits tax. The tax applies only to large organizations. Small and medium size companies are defined as follows:

(1)     the number of employees does not exceed 249 people;

(2)    the annual turnover of less than EUR 50 million or an annual balance sheet do not exceed 43 million EUR.

The tax will be levied on the income  ( recognized as “gone”), at the rate of 25% (or 55% for oil and gas companies, mining resources on the continental shelf of the United Kingdom).

Scottish Limited Partnership

Scottish limited partnership is a private limited partnership with two or more partners (Phys. and jur. Person). At least one partner must be appointed as Managing Partner. Partners can be both physical and legal persons, there is no residency requirements.

LP Scottish companies are not subjected to taxation  if they do not conduct activities in the UK and if partners are non-residents of the UK (we recommend to use companies as partners which are registered outside the EU, offshore).

Scottish LP revenues is treated as income of its partners and therefore are being taxed in the country (jurisdiction) of registration of the partners, accordingly by their shares in the company. The company is required to maintain financial statements but  is not obligated to submit annual financial statements to the Companies House.

Limited Liability Partnership (LLP) and the Limited Liability Company (LTD) can be registered for Value Added Tax (VAT).

The company is not compelled to register for VAT if its sales in the UK do not exceed £ 81.000

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