Doing Business in the U.K. Presented by Maria Fandrakis, Smith and Williamson and Mark McGarry, Saffery Champness LLP

Introducing the U.K.

Introducing the U.K. Population: 65,637,239 * Area: 242,500 sq. km ~ GDP: USD 2,782,363 (2018) * Overall World Doing Business Ranking: 7 * * Estimated figures for 2018 – The World Bank ~ Wikipedia

Introducing the U.K. What constitutes the United Kingdom? England? Scotland? Wales? Ireland? Great Britain? Who holds power in the United Kingdom? The monarch? Parliament and Government? The House of Commons & the House of Lords?

Introducing the U.K. Entrepreneurs Scale-ups Inward bound investment Key sectors

Client case study 1

Case study 1 Client introduction from Nexia Australia. Their nature of business is mining. The reach of the group also spans to South Africa and the Republic of Congo. The parent company was listed in Australia. They took a decision to re-domicile from Australia to the U.K. The new U.K parent entity was AIM listed. The Australian parent company to be disbanded. CEO and CFO were seconded from Australia to the U.K. A number of other senior executives based all around the world were also seconded to the U.K. company. The U.K. company recruited local hire NEDs.

Challenges – Case study 1

Challenges – Case study 1 Trusted advisor able to manage their international requirements in the U.K. Immediate presence & service address in the U.K. Compliance with Company’s House legal requirements. Employees tax implications for directors & seconded team. Remuneration structuring for local NED hires.

Challenges – Case study 1 Compliance with legal requirements of U.K. Tax Authority. U.K. GAAP reporting compliance. AIM listing rules. Full back office assistance.

Solutions – Case study 1

Solutions – Case study 1 Registered office facility address Company secretarial assistance by experienced U.K. team. Tax advice surrounding employment contract and remuneration arrangements for their senior executives/ directors ‘seconded’ to the U.K.. Tax advice and assistance on equity arrangements. Share Incentive trust. Remuneration arrangements for the U.K. NED hires. Payroll processing service. Pensions auto-enrolment advice.

Solutions – Case study 1 (continued) Review of previous year’s Annual Report and the latest Half- year Interim Report. Report issued highlighting the additional disclosures required to meet the Financial Reporting requirements in the U.K. – covering AIM, U.K. Accounting standards applicable, Company law, etc. Business Outsourcing assistance with set-up & maintenance of accounting records, VAT compliance, Corporation tax compliance, Payroll compliance, Company secretarial compliance, etc.

Case study 2

Case study 2 US computer hardware company No previous business presence outside US Identified U.K. as potential location as first step in global expansion Senior US employees to transfer to establish the business

Challenges - Case study 2

Challenges – Case study 2 Costs Financing Banking arrangements Location Recruitment of appropriately skilled employees Work permits for US employees Administrative support, including with its accounting and taxation obligations

Solutions - Case study 2

Solutions – Case study 2 Introductions to real estate search agents and employee recruitment agents Guidance given on remuneration packages Financial forecasts of prospective sales, full costings of expenses and working capital requirements Advice on possible structures resulting in the incorporation of a subsidiary in the U.K. Liaising with lawyers on work permits, employment contracts and other employment issues and with a major bank to open accounts for the new company Provision of full back office services Over subsequent years assisting the new company to establish business operations in other European countries

Value – Case studies 1 & 2

Value International Network with coverage in many countries Collaboration between teams; High level of service; Extension of Nexia team – client perception; Trusted relationship from day 1; Open channels of communication. Expert advice from one provider/ network. Full service offering all in one place. In safe hands – help that eased the stress of re-domicile.

Summary - benefits and challenges of Doing Business in the U.K.

Benefits and challenges The U.K. is the number 1 destination for inward investment in Europe Opportunities in large range of different business sectors Low taxation compared to most other countries – companies’ tax rate of 19%, reducing to 17% in 2020, with 10% patent box and tax incentives such as exemptions on dividends and on capital gains from investments in trading subsidiaries and reliefs, such as R&D, and extensive tax treaties Second largest labour force in the EU (> 30 million) with strong skills, a flexible workforce and competitive employment costs with low social security costs compared to other European countries U.K. Government is committed to encouraging overseas companies and entrepreneurs to establish and invest in the U.K.. Government has £120 billion investment programme to improve our transport systems. Largest air transport system and second largest port system in Europe. Main challenge, as in other countries, is opening a bank account.

The opportunity matrix Category Factor Ranking High/Moderate/Low 1. Ease of starting a business Establishment of business entity Obtaining business permits Low No permits required but some businesses require registration for regulatory purposes 2. Ease of earnings repatriation Payment of dividends Foreign exchange controls None 3. Ease of tax compliance Overall complexity of tax rules and tax administration procedures Availability of tax incentives/concessions Occurrence of tax audits Transfer pricing enforcement Moderate High 4. Ease of hiring and firing Laws that promote labour flexibility

The opportunity matrix Category Factor Ranking High/Moderate/Low 5. Ease of registering and protecting intellectual property Laws that secure intellectual property rights Moderate 6. Ease of obtaining financing Stable banking system and deep capital markets 7. Ease of trading across borders Availability of adequate IT and communications infrastructure High 8. Ease of contract enforceability Robust impartial commercial legal framework and adequate dispute resolution mechanisms 9. Ease of insolvency resolution Robust legal framework that facilitates insolvency/winding up of business

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