What is an UK Agency Company?
The agency structure is a simple set-up where a UK company acts as administrator or agent for a non-UK principal which was registered in another jurisdiction. The UK company will draw on its well respected image and business credibility to trade with clients on behalf of the Principal which in turn retains all the benefits of its own jurisdiction.
The Principal and the Agent sign an agency agreement specifying the exact terms of their agreement including the set out of proper commercial fee for the Agent. All business is then conducted in the name of the UK company, but on behalf of the non-UK company. Clients enter into a contract with the UK company, are invoiced by them and pay the invoices into the bank account of the UK company. Most of the income is then remitted to the non-UK company according to the specificities of the agreement.
It should be noted that if the UK company starts trading within the UK or with any UK businesses, this income would be subject to UK taxation.
The agency agreement between the Principal and the Agent must be properly executed before the UK Company starts to trade. In addition,
- The Agent must not trade within the UK or with any UK business.
- The Agent’s commercial fee needs to be concretely paid out.
- The Beneficial Owner of the Principal should not be subject to UK tax.
- The relationship between the UK and the non-UK company has to be purely commercial.
The success of this structure is owed to the fact that the agent pays corporation tax in the UK according to the amount received for its own commission, after deductions on expenses. Therefore, the HMR&Customs will assess the UK company for taxes whereas the revenue sent to the principal is subject to the rules of the jurisdiction of the principal.