With the current Brexit chaos happening in Parliament at the moment, business owners have yet to see the full impact of Brexit on limited companies.
Since the 2016 vote results, we have been contacted by many worried company owners as well as prospective new company owners about how Brexit will affect the running of their companies.
Many business owners expressed their concerns over their future options and for those as yet to form their first company, they wonder if they should be holding off forming a limited company until after we have finally left the EU.
As we watch the latest events in Parliament over delays to our exit date and negotiations to leave with or without a workable deal, we can honestly say that we are also still a little in the dark too.
No one can say for any certainty what is going to happen to the UK business economy when or if we leave the EU. However, one thing we can do is to provide some information and reassurances to ease your mind about your limited company status.
Existing Limited Companies
If you already run an existing limited company that was registered with Companies House in the UK, then you may be wondering if anything will need to change with your legal status.
Fortunately, if you are already registered your company in England and Wales, Scotland or Northern Ireland, there are no current changes to be made to your status at this present time leading up to the UK leaving the EU. Your rights are protected under well established UK corporate legislation so you can stop worrying and put your mind at ease.
Does my residential status affect things?
Regardless of your residential status, your UK incorporation will not be affected once we leave the EU. So if you are a UK resident, an EU citizen from another EU member state, or a resident of any other non-UK country, your company status will not change.
You have to remember that there are many hundreds of UK registered limited companies that are owned and run by directors and staff that don’t live in the UK. Many international corporations will have many bases and registered offices operating in different countries across the world.
Should I wait until the UK leaves the EU before forming a new company?
We have had a lot of prospective new company owners ask us this question since the 2016 vote to leave the EU. In all honesty, we cannot see any benefits to delaying your company formation and registering your business as a limited company until after we have left the EU.
In fact, if you were to form your own company before the UK actually leaves the EU then the company formations process is worth doing as once you have formed your company you will be protected by current established legal legislation.
Had new company owners decided to hold off registering their limited company for the past two years while waiting for Brexit to happen, then they probably would have struggled to establish their brand and build up their customer base without the professional status that only a limited company can afford.
VAT and banking implications
If you are a non-UK resident looking to form a company in the UK, then we still don’t know as yet how our leaving the EU will affect business banking rates and tax benefits post-Brexit.
We anticipate that there will be some significant changes to company VAT rules, especially because we will no longer be part of the common VAT system that is based on EU VAT law.
Once we have left the EU then Parliament will be free to set its own VAT rules and regulations, including business rates. However, many financial experts predict that this will be of great benefit to UK companies, especially with the pro-business attitude of the current government.
Again, we still don’t know exactly how EU imports and exports will be affected. All imports and exports will be subject to customs controls that as yet haven’t been worked out or agreed upon. But we will be eager to update you as soon as we find out.
On a positive note, many business experts anticipate that many UK based companies will see an increase in the numbers of UK based customers as a result of likely import or export charges.
Many customers will actively source what they want as quickly, cheaply and as hassle-free as possible. If they can source what they need from the UK instead of from Europe or overseas, get their product quicker and can avoid import charges and filling out customs documentation, then it could help to boost UK sales further.
Currently, the UK maintains the lowest Corporation Tax rates of all major worldwide economies. The current government has a long term plan to further reduce corporation tax rates going into the future regardless of the outcomes of Brexit, so the UK still actively encourages investment from companies wanting to set up here.
With plans to consistently reduce corporation tax levels to below 15% in the future, this could help to offset the impact of any new import or export costs and customs duties.
Companies House Brexit changes
As of March 2019, in anticipation of Brexit happening, Companies House have made some amendments to their official forms and Company Registration system.
This is nothing to be too concerned about as they need to be prepared for whichever outcome follows, whether that be a no-deal Brexit or not. Mostly the changes being made are mostly semantics, but here is a brief overview for you:
No-deal Brexit changes
In the event of a no deal Brexit, the following changes will come into effect:
From exit day, the references to and requirements for ‘EEA’ & ‘Non-EEA’ corporate officers will be modified and replaced by ‘UK registered limited companies’ and ‘Other corporate bodies and firms’:
A Limited Company or LLP incorporated in the UK as a corporate officer will have to provide that corporate officer’s name, registered or principal office address and its registration number.
A Limited Company or LLP which has any other entity as a corporate officer will have to provide that corporate officer’s name, registered or principal office address, the legal form of the company or firm and the law by which it is governed and (if applicable) the register in which it is entered and its registration number.
The reporting requirements for overseas companies which open a UK operations base or establishment will become the same regardless of where their home country base is. There will be no distinctions between ‘EEA’ and ‘non-EEA’ requirements.
Societas Europea (SE) changes
From our EU exit date, any SE which is registered in the UK will be converted to a United Kingdom Societas (UK Societas). This will be done automatically.
There is a full list of Companies House official form changes you can check out should the UK leave the EU with no deal.
Leaving the EU with a deal
Again, we don’t know how any deal will affect UK business and trade, so until we actually exit the EU we cannot know how to respond or react to any agreed deals in place.
Forming your company the easy way
Whether or not you are confused about Brexit or worried that our leaving the EU will affect your business, it can be reassuring to know that going through the company formations process is something that can help protect you from any financial fallout.
Remember that once you have incorporated your business it will become its own entity in its own right. This means that you will be offered more protection under UK law as a Limited Company than as a sole trader, normal partnership or unincorporated business.
It is also very cost-effective to form your own company. Many business owners are surprised by how little it actually costs to set up their own limited company.
No one can predict what will happen to UK businesses if or when we leave the EU. If you want to protect your personal assets as well as give your business more professional credibility, then you should look at forming your own Limited Company now rather than later while the future is still so uncertain.
Take a look at our formations packages to see which one is right for your needs, or if you prefer to talk to one of our formations experts with years of experience, then do not hesitate to contact us.
We will be happy to give you plenty of advice and work out the best way forward for you and your business going into the future, despite what Brexit may bring!