Should you set up a subsidiary or register a branch?

The two structures

A UK subsidiary is a new private limited company, incorporated at Companies House, owned by your existing company. It has its own legal identity: it signs its own contracts, employs its own staff, owes its own debts and files its own accounts. It is incorporated online in a day.

A UK establishment, usually called a branch, is your existing company operating in the UK. There is no new entity. The parent is directly liable for everything the UK operation does, and it must register the establishment at Companies House within one month of opening. Registration typically takes several weeks rather than a day, because certified copies of the parent's constitution and, where its home law requires published accounts, those accounts have to be filed with it.

The four questions that usually settle it

1. Do you want the parent liable? With a branch there is no separation at all. A claim against the UK operation is a claim against the parent. This alone decides most cases.
2. Are you employing people here? A subsidiary is a cleaner employer: UK contracts, UK payroll, which is the entity that would hold a sponsor licence if you need to hire someone without UK work rights. A branch can employ, but everything about it is more awkward to explain.
3. Who has to see the parent's accounts? Where the parent's home law requires it to publish accounts, a copy goes on the UK public register with the branch registration and every year after. Groups that would rather their global figures were not downloadable by a UK competitor choose a subsidiary.
4. What would you do with early losses? This is the one real argument for a branch. Losses in a branch can often be set against the parent's profits at home, depending on the parent's own rules. Losses in a subsidiary stay in the UK company until it makes a profit. For a group expecting two years of losses before it turns, that timing can be worth more than everything above.

What still needs judgement

It gives a direction, not an answer. Three things can override it: a regulatory requirement in your sector that specifies a UK entity, a customer or public-sector contract that requires one, and your own country's rules on controlled foreign companies, which we do not advise on and which your advisers at home should be asked about before you commit. If the checker and your instinct disagree, the disagreement is usually where the real question is.

Changing structure later

Groups do move from a branch to a subsidiary once the UK business is established, which is a normal piece of work: incorporate the company, transfer the trade and assets across at a defensible value, deregister the branch. Planning for it at the start makes it cheaper, so if you can see it coming, say so and we will structure the branch with the conversion in mind.