Management reporting and business information

Welcome to our comprehensive Doing Business in the UK article series, designed specifically for international businesses and investors looking to establish or expand their operations in the United Kingdom. This series aims to provide you with essential insights and practical guidance on navigating the UK business landscape.

Throughout this series, we will cover the initial setup of your business, understanding business taxes, and the process of registering a UK business. We will also delve into workforce setup, payroll, employment costs and international hiring considerations for businesses employing people in the UK. Finally, we also explore accountancy processes, compliance and management reporting requirements, and discuss the complexities of importing goods and services into the UK.

As businesses become established and begin trading, they require a different range of accounting, advisory and compliance functions to support their growth.

Management reporting with relevant and timely business information to support decision making is essential. As the UK business activity is growing, it is important to build a flexible solution to support the business as it changes and grows. At BDO, we are well placed to support your UK business through different stages of growth.

Case Study A major overseas snack food business set up a subsidiary in the UK, as part of its market entry into both the UK and European markets. BDO were invited to provide a full outsourced accounting, tax and compliance service for the business, on a phased basis.
During the pre-trading phase BDO’s work involved:	Phase two involved:	Later phases
Confirming charts of accounts, providing due diligence on the systems and procedures Setting up company and compliance as required (company secretarial, payroll, year- end reporting, management accounts, VAT) Setting up financial reporting.	Building links to the stock system Undertaking VAT, payroll and other ongoing compliance KPIs and monthly reporting Preparation of year-end financial statements and dealing with audit queries.	Consolidation and central coordination of the phase 2 work across multiple territories Facilitating the continued growth and overseas expansion of the business. BDO provides businesses with support, at all stages of their lifecycle, from start-up to mature businesses, to run their operations, and help them realise their goals.

 

Outsourced accountancy

While it is possible to continue to retain the accounting records for the UK business in house, foreign groups often choose to outsource the accountancy for their UK subsidiary due to the lack of local expertise in the head office accounts team. Other benefits include the ability to focus on core activities, scalability, risk management, improved reporting and access to technology.

Here are a few things to consider when deciding whether and what to outsource:

Expertise

If the group opts to maintain the day-to-day accounts in house by the group accounts team in the global head office, this can be complemented by local experts for the year end statutory reporting and all UK tax compliance. As the UK subsidiary grows, some groups decide to employ a local in-house team which is also often complemented by external advisors to cover the full expertise required.

It is important to choose the right partner to support you. There are many accountancy firms within the UK but not all of them have the required international and/or sector relevant experience or are capable to support you with the width of services you will require as your operations in the UK grow. The ultimate responsibility to remain compliant remains with you. So, it is advisable to choose a firm that has the required expertise to educate you about local regulation and are proactively putting you in touch with other experts and advisors as required.

MTD: Making Tax Digital

The UK tax office requires records to be kept in a digital format and for tax returns (currently just VAT but other taxes to follow) to be filed electronically via MTD compatible software. You must have software capable of providing tax information to the tax office and receiving information from them digitally via their Application Programming Interface (API) platform. Business records can be kept in a range of compatible digital formats but there must be a digital link between all the different software used.

Some software will be MTD compatible directly and for others it is usually possible to set up the UK VAT codes in the system and extract a file that can be used to file tax returns via a bridging software. BDO has a bridging software in place and can help our international clients to file their UK VAT returns in compliance with MTD.

Choice of accounting software

If you have a group software that you use across your global operations and all (or many of) your international subsidiaries, it will make sense to set-up the UK subsidiary on that same software to simplify consolidation and streamline reporting processes.

We have experience with a wide range of accounting software and would be happy to assist with outsourced accounting support on your group software. In this case it would be you holding the software licence and the responsibility for system breakdowns and potential process inefficiencies. It is also your responsibility to ensure robust data protection measures are in place to safeguard the sensitive financial information, but we are always happy to support you for example with our Technology Advisory Services or our wider Risk Advisory Services.

Where you do not have a suitable group reporting software in place, you can take advantage of BDO’s standard IT applications with the highest level of data security, automation and digitalisation. Depending on the complexity of your reporting requirements, we will choose the right software for your needs. Complexity considerations include foreign currency reporting requirements and data analysis by departments or cost centres for example.

Scalability

Your in-house team may not have the capacity or skills to take on the accountancy for a further entity. And with the size and complexity of your UK operations changing, an outsourced solution is more flexible.

Consider all options

If your in-house team needs support in the short term, you may find BDO’s Strategic Resourcing Solutions offering to be helpful. It can be quicker and more cost-effective to bring in the talent you need, for the time you need it, than to develop that resource in-house or recruit permanently.

If your UK subsidiary is one of several foreign group entities and you wish to free up time for your in-house team for more strategic work rather than spending their time on the routine tasks necessary for compliance across every entity in every jurisdiction. Our global outsourcing solution offers you in-country tax and finance experts, a uniform and consistent global approach and a single, UK-based, point of contact for all services, across all jurisdictions. You will have real-time visibility and global control through our client portal.