An issue which arises time and time again with our overseas based clients is that of opening a UK business bank account. While it’s easy for a non-UK resident to register a limited company in the UK, opening a business bank account is a little more complicated. It is not a legal requirement to have a separate bank account for your UK limited company but it is an absolute necessity from a practical standpoint – without a business bank account, it will become increasingly challenging to manage your accounting and to avoid large overseas payment charges.
The Problem
Over the past 10 years, there is a worldwide crackdown on money-laundering. You can’t just apply online and then start depositing cheques. Banks are very particular about their acceptance criteria and about who they will deal with these days. There is no precise “how to open a UK bank account for overseas owned companies” handbook. Unfortunately, it is often easier for UK banks to decline to open an account, than it is to complete the hurdles and internal challenges they face from a compliance perspective.
Documentation that will always be necessary
Whatever bank/facility you try to sign up with will ask you to supply ID and company registration documents.
Typical requirements:
– Passport;
– Proof of address: Utility bill showing the signatory’s name and address. It should be no more than 3 months old;
– Company registration documents;
– Banker’s reference;
– Board resolution appointing signatories to the account.
Foreign documents will likely have to be apostilled. You will probably need to provide additional information about your business. Banks want to know where your money will be coming from and the amounts you intend to hold on deposit.
What Options are there?
- Traditional High Street Banks
Some clients have success with this. These include larger companies with long trading history, employees in the UK or UK entities controlled by large overseas parent companies. Nevertheless, it can still take 3 to 4 months to open the account once the request is made. Classic High street banks are HSBC, Lloyds and Barclays International.
2. Online Payment Providers
The over compliance and requirement to place funds on deposit often mean that businesses need to look for alternative options to their banking requirements. There are other options to the traditional approach of establishing a UK bank account to conduct business with UK countries.
Online payment providers/global payment platforms and often be a short or even long term solution depending on the volume of expected trading for the company. Examples of this are Transferwise.com, Payoneer and MoneynetInt.
You get a UK bank account with a sort code and UK IBAN. Most of these providers also issue credit cards. They accept overseas residents and you can receive HMRC VAT refunds into this account. We recommend this option to small to medium e-commerce traders who often need an account set up quickly and need to trade in various currencies. Often the exchange rate given by these providers are more attractive than rates quoted by traditional high street banks.
3. UK Branch of overseas bank
Another option to consider is to check whether the bank you have an account with for the parent company also offers banking services under a local branch in the UK. Bank Leumi and Bank Mizrahi have a UK banking license and do provide corporate accounts for UK subsidiaries of Israeli entities. This is a great option if you have a good relationship with the overseas bank but fees will be higher than high street or online banks. The advantage is that the KYC process might be less compared to Highstreet bank as they would have done the process already for the parent entity.
4. A British pound sterling account in your local bank
As mentioned above, it is not mandatory to have a separate bank account for your UK limited company. Hence the final option is to open a GBP account in your local bank account which will allow you to receive and pay GBP. The disadvantage is that if the GBP needs to be converted often unfavourable exchange rates are offered and you will not have a UK sort code and IBAN which might cause difficulties for some customers. In addition, there might be issues with withholding taxes when paying UK suppliers from your Israeli bank account.
FKGB
As accountants, although we can’t offer any type of banking assurances, we will provide the support/documentation required when making your applications and provide advice based on our experience to the provider that could best help meet your demands.
