Overview

There are two principal methods of carrying on business directly in the UK: by incorporating a UK subsidiary or by operating in the UK through an establishment. There are, of course, also indirect methods of trading in the UK, for example through an agency arrangement. This guide, however, explores the implications for an overseas company operating either through a UK subsidiary or a UK establishment.

When an overseas company chooses to incorporate a subsidiary in the UK, it sets up a separate legal entity, so that, save in exceptional circumstances, the debts of the subsidiary company cannot be claimed from the funds of the overseas company and vice versa.

To be considered as a UK establishment, the place from which the overseas company conducts business should have at least the appearance of permanence and additionally be an organised part of the overseas company (i.e. with its own management and physically equipped to negotiate business with third parties directly).

As described later in this article, the concept of establishment is an umbrella concept which includes both branches and places of business.

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