Expanding into the UK — structuring the Finance Function

The UK remains an attractive economy in which to do business.

With a central location, access to a diverse skill base and open trade many international organisations continue to expand into the UK.

In fact, setting up in the UK is reasonably straight forward for companies who are not regulated by authorities such as the FCA or Ofcom.

There are a number of online guides available on the compliance requirements of setting up in the UK, looking at company structure, Accounting, Audit and Tax requirements and Employment Law.

But what about the practicalities and actually managing the day to day Financial activities of the new UK business?

Many companies expand into the UK from the US or Asia and the cultures and compliance requirements in these regions are very different so it’s not always immediately obvious what is needed ‘locally’.

There are a number of ways to address this:

  1. Keep the Finance function in-house at the overseas parent (or shared services centre) and engage with an UK accounting firm to address local compliance needs
  2. Outsource Accounting to a specialist Accounting & Bookkeeping service provider, located offsite and in the UK
  3. Partner with a professional services company that will provide specialist short term Finance resources and support to set up and run your in-house finance function temporarily until you can define and recruit a permanent team

The first two options are suitable for organisations whose model is to set strategy and direction from the overseas head office, with the UK office serving as a sales office and only limited decision making authority.

It would be possible to centralise the Finance function in a shared service centre or in the head office. The need for onsite Finance support is reduced as the company direction is set centrally.

UK compliance permits the Accounting function to be undertaken overseas; however local filing and taxation requirements must be met.

It is important to consider whether the UK entity will require an audit and how this will be facilitated if Accounting is completed overseas.

The third option is more suitable for companies who have devolved responsibility to the local management who are actively involved in decision making and strategy.

In order to be effective the UK management will require timely Financial information and support from an in-house team.

Conclusion

Until the company knows exactly what they need and want from their local Finance team it can be risky and expensive to commit to hiring UK staff immediately.

It is challenging to balance the skill set needed to complete the day to day Accounting activity with the requirement for strategic support needed by the management team.

This is very rarely one individual and the new UK business may not yet have the scale to justify the recruitment of two Finance professionals immediately.

However, there are professional services companies who specialise in providing the senior Finance support to address this challenge.

This makes these skills accessible to smaller entities before they need a full time Accounts person.

The external company will support the new business as it grows and help them identify the skills they need to recruit and when.

This keeps the costs down but the skill level high. They work as if they are part of the team and in- house.

This is not a challenge unique to the Finance function however and these principles can be applied to HR, Marketing and IT support also.

The options for setting up the infrastructure for an overseas company expanding into the UK is getting more and more accessible, as people embrace new technology and flexible ways of working.

This flexibility means overseas companies have more options available to them than hiring immediately and can find solutions which grow with them.

This can only be good for the UK economy going forward and for the overseas companies expanding into Europe.

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