PROTECT WEBSITES AND INTELLECTUAL PROPERTY
As a non-UK business owner, you can protect intangible assets by registering them to a UK company specifically set up for the purpose of safeguarding those assets. Intangible assets are generated by creativity or acquired for trading purposes and include patents, brand names, copyrights, trade marks and, frequently overlooked, domain names and websites.
Trading companies can find themselves in financially difficult situations in a variety of ways, very often through no fault of their own as in the case of accidents or unforeseen natural events. Depending on the country or jurisdiction in which they are registered, a company facing financial difficulty can lose all its assets, including intangible assets, by having them seized by a liquidator. The loss of an established website or other assets means that business owners cannot easily restart their businesses.
WESITES, DOMAIN NAMES AND SEO RANKINGS
There are very few companies that trade without a website. Your website, like most, will have unique and copyrighted content: content that is designed to generate sales, raise funds or, quite possibly, achieve other objectives. An indication of its value lies in its search engine optimised (SEO) ranking and its success in acquiring sales using Social Media Marketing (SMM). The greater the free sales generated by a website, the more it is worth. Free sales being sales that you do not directly pay for as in pay per click (PPC) advertising. To get an idea of the value of your website, simply visit the websites of companies engaged in website design, SEO work and SMM. They are keen to show you the potential return and value of your investment in their services.
The factors that will affect the valuation of your website and domain name are as follows:
- How long it takes to build up the SEO ranking (in some cases, it can take up to 3 years to optimise it),
- The number of free sales per month it generates,
- The cost of converting or acquiring a sale by alternative methods such as Pay Per Click, and
- The average profit per sale.
A quick review of your sales figures and the source of those sales will show you how much your website and domain name are worth. Keeping it safe by having it registered to a non-trading company makes sense. So, for example
- A website’s SEO ranking generates 100 free sales per month.
- The website’s PPC campaign achieves a cost of acquisition per sale of £50.
- The effectiveness of the content diminishes over 3 years (without further input from you).
Its value would be (100 X 50 X 36) / 2 = £90,000
OTHER INTANGIBLE ASSETS
Businesses can have several other types of valuable assets, many of which are intangible and generated by creativity, such as patents, trade marks, brand names and copyrights. These are usually recognised, and a great deal of effort is made to protect them via registrations, licencing agreements and so on. However, they should also be protected from financial difficulties by being kept in a separate, non-trading company free from financial risk.
WHY USE A UK COMPANY
UK companies are ideal for non-UK residents to use to protect their assets, tangible and intangible, for the following reasons:
Only one person required
A UK company must have, at least, one director and one shareholder. However, so long as the director is over 16, he or she can be both director and shareholder. This allows owners to retain 100% control of their assets.
Directors and shareholders are not required to be UK residents.
A UK company can be set up online with no requirement for paperwork. There is, therefore, no need to be in the UK to register a company.
Requires one working day or less
Usually, it takes less than one working day to set up a company. Same-day service is available to help form companies within about three hours.
Electronically Available Formation Documents
All formation documents are available electronically, which includes the Certificate of Incorporation, Share certificates and the Memorandum and Articles of Association (the constitution of the company). Our system sends you these documents by email automatically.
Companies House Register
Within one working day of the company being formed, its details will be available on the Companies House website. This is the government-controlled website that maintains all details of UK-registered companies.
Registered Office Availability
A UK company has to have an official address in the UK. Most formation agents, such as us, provide these for very little cost. Ultimately, the entire cost of setting up a company and subscribing to a registered office and directors’ service for one year will be less than £50.
Companies House facilitates a great deal of privacy. So, private addresses of the owners of a company are not made public.
ANNUAL REQUIREMENTS AND COSTS OF ADMINISTERING UK COMPANIES
Companies House has simple annual compliance requirements. As the owner of a small company, you will not have to appoint accountants or have your annual accounts certified by an auditor.
Your company can hold assets securely and will meet the criteria of a non-trading company if it has no transactions. It will need to file accounts, which can be prepared online and consist of nothing more than a few lines. Companies House does not charge you to file accounts. If you are unable to prepare non-trading accounts or do not wish to do so, there are companies, like us, that charge as little as £20 + VAT for this service.
Annual Confirmation Statement
Companies House also requires the online submission of an Annual Confirmation Statement. This statement gives details of the owners and shareholders of the company (not the personal addresses), the share capital of the company and any changes that have occurred during the year. The requirements are simple. Companies House charges £13 to process this statement. Our systems allow you to submit the statement online, and we charge £3.50 + VAT to cover our service charges.
Corporation Tax Returns
Provided you inform Her Majesty’s Revenue and Customs (HMRC-the UK taxation authority) that your company is not trading, you will not have to file corporation tax returns.
OTHER ADVANTAGES OF USING UK COMPANIES TO SECURE ASSETS
International contracts and cross-border transactions are often made subject to the governing laws of England, even in countries that have no geographical links with the UK. There is a preference for English Law because it is, primarily, well known and well developed as is the UK’s system of jurisprudence. This means that a company’s intangible assets and intellectual property are secure even if that company enters into licencing agreements to generate an income from them.
Your UK company will not be taxed if it is dormant. However, if you choose to generate an income from your intellectual property by licencing it to a third party, taxation may need to be considered.UK taxes are amongst the lowest rates for any developed country. Corporation tax is currently 19%. Low tax rates and the ability to make free overseas payments without the deduction of withholding tax also allows traders to use their UK companies to mitigate international tax liabilities.
To read more about UK Taxation, you might like to read UK TAXATION BLOG.
Please note: This article should not be relied upon when making any decisions or taking any action of any kind. Please consult professional advisers before making any decision based on the contents of this blog.