An overseas company must register with Companies House if they want to set up a place of business in the UK. This would mean that the overseas company has a physical presence in the UK through which it carries on business.

If an overseas company does not have a physical presence in the UK, they are not usually required to register with Companies House. For example, an independent agent who conducts business on behalf of an overseas company is not seen as the overseas company having a physical presence in the UK, neither is an occasional location such as a hotel where a director of an overseas company may conduct business during periodic visits to the UK.

If the overseas company is required to register, they must submit a completed OS IN01 form and pay a registration fee of £71 to Companies House. If the company is registering its first UK establishment, it must also send Companies House a certified copy of the company’s constitutional documents and a copy of the company’s latest set of accounts (with a certified translation in English if prepared in another language).

The overseas company can be registered using its corporate name (its name under the law of the country of incorporation), or an alternative name under which it proposes to carry on business in the UK.

There are a number of rules and regulations that you must be aware of when you employ staff for the first time.

HMRC’s guidance sets out some important issues to be aware of when becoming an employer.

1. Decide how much to pay someone – you must pay your employee at least the National Minimum Wage.
2. Check if someone has the legal right to work in the UK. You may have to do other employment checks as well.
3. Check if you need to apply for a DBS check (formerly known as a CRB check) if you work in a field that requires one, e.g. with vulnerable people or security.
4. Take out employment insurance – you will need employers’ liability insurance as soon as you become an employer.
5. Send details of the job (including terms and conditions) in writing to your employee. You need to give your employee a written statement of employment if you are employing someone for more than 1 month.
6. Ensure that you register as an employer with HMRC. You can do this up to 4 weeks before you pay your new staff. This process must also be completed by directors of a limited company who employ themselves to work in the company.
7. Check if you need to automatically enrol your staff into a workplace pension scheme.

When it comes to paying staff, you can use a payroll provider or process your payroll in-house. If you decide to run your own payroll you must choose suitable payroll software. Setting up payroll for the first time can be an onerous and complex task.

We can help you complete this set-up process and look after the payroll for you. Call if you need more information.

A recent post by Companies House confirmed that they are now using new powers to challenge the registration of certain company names.

Extracts from their recent blog post is reproduced below:

“New powers to challenge company names  

These new measures build on existing controls on company names. Names cannot be the same as or too similar to an existing name, and certain terms are restricted, such as terms implying a connection to the UK government or using a sensitive word or expression.

Under the Economic Crime and Corporate Transparency Act, we can now also reject an application to register a name where we have reason to believe:

• the name is intended to facilitate fraud
• the name is comprised of or contains a computer code
• the name is likely to give the false impression the company is connected to a foreign government or an international organisation whose members include two or more countries or territories (or their governments)

We can also direct companies to change their name in more circumstances, for example, where the name has been used, or is intended to be used, by the company to facilitate fraudulent activity.

If a company fails to change its name within 28 days, we can now determine a new name for the company, for example, changing the company name to its registered company number.

We also have the power to suppress a name from the register while a company responds to a direction to change its name.

Failure to comply is an offence

If a company does not respond to a direction to change their company name within 28 days, an offence is committed.

It’s also an offence to continue using a company name which we have directed to change.

Company Names Tribunal

The Company Names Tribunal continues to be responsible for considering objections to the use of a name which is:

• the same as an existing name in which another person has goodwill
• sufficiently similar to that name that it is likely to mislead

We're confident that, over time, these new powers will make a difference to the accuracy and integrity of the information on the register and will help to make sure the UK remains a great place to do business.”

A reminder that businesses must submit all export declarations through the Customs Declaration Service (CDS) by 4 June.

Businesses exporting goods have less than one month left to move across to the CDS, HM Revenue and Customs (HMRC) announced today.

Export declarations must be submitted through CDS from 4 June this year, when it replaces the Customs Handling Import and Export Freight (CHIEF) system for all trade declarations.

CDS provides businesses with a more user-friendly, streamlined system with greater functionality. It has been running since 2018 for import declarations and more than 117 million customs declarations have already been submitted through CDS.

HMRC is working closely with the border industry and directly contacting all declarants and traders to urge them to access the available support now and transfer over to CDS.

Businesses with customs agents should ensure their agent is ready to use CDS. Those without a customs agent must prepare to make their own declarations using software that works with the system.

Further information is available on GOV.UK, including the CDS toolkit and checklists, which break down the individual steps traders need to take. Traders can also subscribe to CDS alerts and access the free Trader Dress Rehearsal to practice submitting declarations.

There are special rules concerning the liability to IHT of a transfer made during a lifetime. For example, most gifts made during a person's life are not subject to tax at the time of the gift. These lifetime transfers are known as 'potentially exempt transfers' or 'PETs'. 

These gifts or transfers achieve their potential of becoming exempt from IHT if the taxpayer survives for more than seven years after making the gift. If the taxpayer dies within three years of making the gift, then the IHT position is as if the gift was made on death. A tapered relief is available if death occurs between three and seven years after the gift is made.

IHT can also be chargeable if the person making the gift retains some 'enjoyment' of the gift made. For example, where an elderly person gifts their home to their children (who usually live elsewhere) and continues to live in the house rent-free. In this case the taxman will not accept that a true gift has been made and the 'gift' would remain subject to inheritance tax even if the taxpayer dies more than 7 years after the transfer.

In addition, transfers into most types of discretionary trusts, transfers involving companies, and transfers into most types of interest in possession trusts are immediately chargeable transfers.

The Economic Crime Levy is a levy that applies to businesses that are already regulated for anti-money laundering purposes.

Your business must register if your UK revenue is £10.2 million or more in a financial year and:

• Your business is already regulated by HMRC for anti-money laundering purposes.
• Your business is regulated by a professional body for anti-money laundering purposes.

The financial year runs from 1 April to 31 March of the following year. Not all entities have to register and submit a return – it depends on the identity of their collection authority.

Businesses only need to register for the Economic Crime Levy once but are required to submit a return and pay the levy on an annual basis.

The amount businesses need to pay depends on their UK revenue for the financial year.

There are four size bands:

• small entities (less than £10.2 million in UK revenue);
• medium entities (between £10.2 million and £36 million in UK revenue);
• large entities (between £36 million and £1 billion in UK revenue); and
• very large entities (over £1 billion in UK revenue).

Small entities do not need to pay the levy, however:

• medium entities must pay £10,000;
• large entities must pay £36,000; and
• very large entities must pay £500,000 from April 2024. The levy was previously £250,000 but was increased as part of the recent Spring Budget measures. As is currently the case, payments for 2024-25 will be due in the following financial year. No other changes to the levy were announced.

The amount due for the levy may be reduced if businesses carry out regulated activities for only part of the financial year.

In the Autumn Statement last year, it was announced that the existing R&D Expenditure Credit and Small and Medium Enterprise Scheme would be merged from April 2024. The merged scheme R&D expenditure credit (RDEC) and enhanced R&D intensive support (ERIS) became effective for accounting periods beginning on or after 1 April 2024. The expenditure rules for both are the same, but the calculation is different.

The merged RDEC scheme is a taxable expenditure credit and can be claimed by eligible trading companies within the charge to UK Corporation Tax. You can choose to claim under the merged scheme instead even if you are eligible for the ERIS, but you cannot claim under both schemes for the same expenditure.

The calculation and the payment steps of the merged scheme RDEC are broadly the same as the old RDEC scheme, however:

• a lower rate of notional tax restriction is available to small profit-makers and loss-makers; and
• a more generous PAYE cap applies.

The merged RDEC scheme is liable to Corporation Tax as it is deemed to be trading income.

The ERIS scheme allows loss-making R&D intensive SMEs to:

• deduct an extra 86% of their qualifying costs (additional deduction) in calculating their adjusted trading loss, as well as the 100% deduction which already appears in the accounts, to make a total of 186% deduction; and
• claim a payable tax credit, which is not liable to tax, and which is worth up to 14.5% of the surrendered loss.

The changes in the rules are complex and advice should be sought to ensure that any R&D spend remains qualifying. There have also been significant changes to the restrictions for expenditure on overseas R&D activities which are now generally restricted.

HMRC’s published guidance titled ‘Check genuine HMRC contact that uses more than one communication method’ has been updated. The list is intended to help taxpayers check if recent contacts purporting to be from HMRC are actually a scam.

The guidance contains a list of emails, phone calls, letters and text messages recently issued by HMRC that are genuine. The list can be useful to help taxpayers decide if a contact is genuine or from a fraudster trying to trick taxpayers into supplying confidential or personal information.

Some of the most recent additions to the list include the following:

• Temporary Customer Compliance Manager service for mid-size businesses. HMRC’s Customer Insight Team will be inviting mid-size businesses and their agents for feedback about the temporary Customer Compliance Manager service. From 1 March 2024 up to and including 31 May 2024 HMRC may contact you by phone or email.
• Tax code notice research. HMRC are working with independent research agency People for Research to recruit participants to gather feedback on communications notifying taxpayers of their tax code. You may have been contacted by email or phone call to take part in the research.
• Cryptoasset research. HMRC are working with independent research agency Ipsos UK to carry out research into the cryptoasset industry. From 2 April 2024 up to and including 31 May 2024 Ipsos UK may contact you by email, letter or phone. Ipsos are carrying out research on behalf of HMRC into the cryptoasset industry. The research aims to understand the behaviours and attitudes of individual owners of cryptoassets and the operation and business models of cryptoasset service providers. You may receive a letter, email or phone call from Ipsos UK asking you to take part in an interview, which will be conducted online or by telephone.
• Impact of Making Tax Digital on Income Tax self-assessment taxpayers. HMRC are working with independent research agency Verian to explore the impact of Making Tax Digital (MTD) on Income Tax self-assessment (ITSA) taxpayers. You may be contacted through email, letter or phone call and asked to take part in a telephone interview or a survey.

Participation in any of these research items is voluntary.

The Ministry of Justice has published an urgent warning for anyone with unclaimed dormant funds held by the Courts Funds Office (CFO). Recent changes in legislation have changed the rules for individuals or entities with dormant funds held by the CFO.

The new rules come into effect from 1 June 2024 and mean that any account that has been held dormant within the CFO for 30 years or more will be surrendered and any future right to claim the funds will be extinguished.

Funds are classified as dormant if they have been held by CFO for an extended period, with no activity on the account, and any efforts to trace the intended beneficiary have been unsuccessful.

There is now less than 1 month left to claims funds dating back 30 years or more. Going forward, any account that subsequently reaches 30 years of dormancy will be surrendered on the date that this milestone is passed.

There is a range of reasons why CFO hold funds including, but not limited to, the following:

• damages that were awarded to children as a result of civil legal action in a county court in England, Wales, or the High Court of Justice;
• assets belonging to people who lack capacity to manage their own financial affairs and where the Court of Protection has appointed someone else to do so; and
• pending settlements of civil court action, or on behalf of dissenting shareholders, widows, and other clients.

If you think you may be affected there is an online database available at https://find-unclaimed-court-money.service.justice.gov.uk/ or you can contact the CFO directly.

HMRC is currently sending the annual tax credit renewal packs to the 730,000 tax credit claimants and is encouraging recipients to renew their tax credits claim online. HMRC started writing to taxpayers on 2 May and expects all packs to be with recipients by the 19 June 2024. 

Renewal packs with a black stripe across the front page are automatically renewed. However, taxpayers must inform HMRC of any changes in circumstances that are not reported during the year, such as new working hours, different childcare costs or changes in pay.

A renewal is required if the pack has a red stripe across the first page and it says, 'reply now'. Families and individuals that receive tax credits should ensure that they renew their tax credit claims by 31 July 2024. Claimants who do not renew on-time may have their payments stopped. Around 10,000 taxpayers are expected to receive the packs with a red stripe and can renew their tax credits via GOV.UK or by using HMRC’s app.

Universal Credit is expected to fully replace tax credits and other legacy benefits (including Income-Related Employment and Support Allowance, Income-Based Jobseeker’s Allowance) by 5 April 2025. This means that claimants who receive tax credits will receive a letter from the Department for Work and Pensions (DWP) or the Department for Communities if they live in Northern Ireland telling them about the move to Universal Credit. This letter is called a Migration Notice and taxpayers are urged not to ignore it.

The recently introduced Economic Crime and Transparency Act has gifted Companies House a range of new powers aimed at reducing exploitation by corporate entities to pursue illegal enterprise.

The aim of the new reforms are:

• Introducing identity verification for all new and existing registered company directors, People with Significant Control, and those delivering documents to the Registrar. This will improve the accuracy of Companies House data, to support business decisions and law enforcement investigations.
• Broadening the Registrar of Companies House’s powers so that the Registrar can become a more active gatekeeper over company creation and custodian of more reliable data, including new powers to check, remove or decline information submitted to, or already on, the companies register.
• Improving the financial information on the register so that the register is more reliable, complete and accurate, reflects the latest advancements in digital technology, and enables better business decisions.
• Providing Companies House with more effective investigation and enforcement powers and introducing better cross-checking of data with other public and private sector bodies. Companies House will be able to proactively share information with law enforcement bodies where they have evidence of anomalous filings or suspicious behaviour.
• Enhancing the protection of personal information provided to Companies House to protect individuals from fraud and other harms.
• Broader reforms to clamp down on misuse of corporate entities.

In addition to the above, the bill will:

• enable businesses in certain situations to share information more easily for the purposes of preventing, investigating or detecting economic crime by disapplying civil liability for breaches of confidentiality for firms who share information to combat economic crime;
• enable proactive intelligence gathering by law enforcement and strengthening the National Crime Agency’s Financial Intelligence Unit’s (FIU) ability to obtain information from businesses relating to money laundering and terrorist financing by removing the requirement for a pre-existing Suspicious Activity Report (SAR) to have been submitted before an Information Order (IO) can be made; and
• focus private sector and law enforcement resources on high value activity, reducing the reporting burden on businesses and enabling greater prioritisation of law enforcement resource by expanding the types of case in which businesses can deal with clients’ property without having to first submit a Defence Against Money Laundering (DAML) SAR.

As more information on the detail of how these changes will impact SMEs, we will post further updates on this newsfeed.

New consumer protections against hacking and cyber-attacks came into force at the end of April 2024. All internet connected smart devices will be required by law to meet minimum-security standards. 

Manufacturers will be legally required to protect consumers from hackers and cyber criminals from accessing devices with internet or network connectivity – from smartphones to games consoles and connected fridges – as the UK becomes the first country in the world to introduce these laws.

Under the new regime, manufacturers will be banned from having weak, easily guessable default passwords like ‘admin’ or ‘12345’ and if there is a common password the user will be promoted to change it on start-up. This will help prevent threats like the damaging Mirai attack in 2016 which saw 300,000 smart products compromised due to weak security features and used to attack major internet platforms and services, leaving much of the US East Coast without internet. Since then, similar attacks have occurred on UK banks including Lloyds and RBS leading to disruption to customers. 

The move marks a significant step towards boosting the UK’s resilience towards cyber-crime, as recent figures show 99% of UK adults own at least one smart device and UK households own an average of nine connected devices. The new regime will also help give customers confidence in buying and using products, which will in turn help grow businesses and the economy.

An investigation conducted by Which? showed that a home filled with smart devices could be exposed to more than 12,000 hacking attacks from across the world in a single week, with a total of 2,684 attempts to guess weak default passwords on just five devices.