In the first quarter of 2016 there has been a significant increase in South African businesses looking to expand into the UK and Europe. Scott Brown, MD of Sable Accounting believes that this spike in applications is due to the access to Europe from the UK and the political situation in the country.
“The world is a global village and many entrepreneurs are becoming global citizens, internationalising their businesses, their money and their lives,” he adds.
According to Ashley Deakin, COO of Sable International, many successful South African entrepreneurs are currently considering opening branches, subsidiaries or franchises of their businesses in the UK, “It’s a good place to do business. There is a stable economy, the country is well-legislated, and there is no corruption,” says Deakin.
The backbone of the UK is based on small to medium enterprises (SME’s) and Britain is sweetening the deal for business owners from South Africa to open businesses within their borders by offering government grants. The UK Trade and Industry offers free advice and is an excellent source of information and should be the first point of contact for anyone wishing to expand their business to the UK. Britain offers the best corporate tax rate currently at 20% but by 2020, it will be 17% and the lowest in Europe.
“Our experience is that the trend in businesses expanding to the UK are IT software development companies and digital media.”
Despite these positive factors, Britain is a complicated place to do business and with stringent international money laundering legislation and control, South African businesses wishing to extend globally have red tape and political obstacles to overcome.
“At the moment British and European businesses want to engage with what they know – companies that conform to the UK’s strict tax legislation; the rigorous administration required by the UK gives peace of mind,” said Brown.
“If you’re based in the UK, Europe is open to you, but in my experience, a non-British citizen cannot even open a bank account without a tremendous struggle. It’s essential to work with a company or agency that understands the complex British tax laws, is a partner to negotiate the intricate banking system and is able to offer a high street address - British red tape is onerous to say the least,” adds Deakin.
“Once we have assisted in the initial set up, which can take up to six months, we offer the standard business services to a new business, such as accounting, book keeping, pay roll management, and taxes – It really helps a foreign newcomer into the UK market to have a one-stop shop for all their administrative needs,” says Deakin.
Deakin gives sound advice for entrepreneurs and business owners who want to expand into the UK and European markets:
- Have realistic expectations – it takes longer than expected just to open a bank account, possibly six months
- Form a UK limited company. The banks prefer to deal with local entities, and UK contractual law binds clients and suppliers
- The UK processes work – they are efficient, but you have to understand and follow procedures to the letter. Seek assistance from a credible agent to assist you with setting up a business in the UK
Our clients are global citizens, those people with businesses, properties and investments held in a number of locations around the world. “We’ve opened our own offices in London, so understand the complex systems and requirements.”