How to register a company in Scotland: a complete guide

Registering a foreign company in Scotland will bring a number of advantages to an international entrepreneur. It will help protect your assets, avoid paying Scottish taxes on international business deals, and provide for the confidentiality of company ownership. Scotland is a perfectly reputable jurisdiction that has never been on any black lists. Due to this fact, dealings with Scottish-based companies do not attract unnecessary attention on the part of fiscal bodies nor banks. How should you go about registering a company in Scotland thus increasing your wealth?  

Basic facts about Scotland

If you would like to set up a company in Scotland, you have to take several points into account. Scotland is part of Great Britain but the legal system applied there is different from the legal system in England. Most laws are common for the whole of the UK but some regulations in Scotland differ from those in other parts of the country. This concerns the following areas:

• Property rights;
• Security provision;
• Trust registration and activities.

The Parliament of Scotland is in charge of determining the tax rates in the country. The corporate income tax of 19% is standard for the whole of the UK.

Scottish Limited Partnership

Most foreign business people registering companies in Scotland prefer to set up Scottish Limited Partnerships (SLP). This form of company ownership is so popular due to the following characteristics that it possesses:

• Simplicity of SLP formation;
• Legal personality status;
• Tax transparency;
• Relatively small cost of company formation;
• Absence of requirements to the registered capital;
• Minimal reporting requirements on the condition that the profits are obtained from outside Scotland.

Two or more partners are needed to form a Scottish Limited Partnership. The Partners shall have the following statuses:

• General Partner whose liability for company debts and other obligations is unlimited; 
• Limited Partners whose liabilities are limited to the amount of capital that they have invested into forming the Partnership.

Registering a company in Scotland: process description

Several legislative acts govern the establishment and the operations of Scottish companies:

• The Companies Act of 2006;
• The Limited Liability Partnerships Act of 2000;
• The Partnership Act of 1890;
• The Limited Partnerships Act of 1907.

The application for a SLP formation has to be submitted to the Companies House in Scotland. There is a uniform company register in the United Kingdom but it has division in all parts of the country. 

Registering a company in Scotland: Choosing the company name  

The name of the company has to be unique and it also should not resemble the names of other corporate entities. A Limited Liability Partnership must have the ‘LLP’ acronym at the end of its name and a Limited Partnership’s name must end in ‘LP’ or ‘Limited Partnership’.

Certain words that could have references to the state authorities or some business areas may not be used in the SLP name (for instance, the words ‘Scots’, ‘Scottish’, ‘bank’, ‘association’, and so on).

Documents to be submitted to the Companies House in Edinburgh:

• LP5 (s) Form that contains the following information: the desirable name of the company, the types of the prospective business activities, the registered legal address in Scotland, the amounts of capital contributed by each Partner, and their personal data;
• Personal data are required from all company participants who have significant control of the company (they have more than a quarter of the company ownership shares or hold top management positions);
• SLP CS01 Form that is a declaration of compliance with the laws (to be submitted every year);
• Memorandum of Association;
• Articles of Association.

When the company is registered in Scotland

After processing the application documents, the Companies House officers will issue a certificate of company registration that carries the name of the company and its unique identification number. The ‘SC’ acronym on the certificate stands for ‘Scottish Company’. When the signatories to the Partnership Agreement obtain the registration certificate, the company becomes a functional legal personality that can enter business deals in its own rights. (This is the principle difference between a Scottish Partnership and a Partnership in any other European state.)

The cost of company registration in Scotland (the state duties):

• £40 – Submission of a paper-based application for company formation;
• £10 – Electronic submission of the application;
• £12 – Submission of the application via the Internet;
• £100 – express registration of the company on the day when the paper-based application is submitted;
• £30 — express registration of the company on the day when the electronic application is submitted;
• £17 – SLP CS01 Form completion fee.

Reporting requirements to companies registered in Scotland

The reporting requirements depend on the size of the company. Companies are classified as micro, small, medium, and large in Scotland. Micro and small companies are subject to lax rules. In order to qualify for a micro or small company, two of the following three requirements need to be satisfied:

• The gross annual income does not exceed £10.2 million;
• The total cost of company property does not exceed £5.1 million;
• The average number of company employees per year does not exceed 50.

The standard set of reports to be submitted by Scottish-registered companies includes the following documents:

• Balance sheet;
• Profit and loss statement;
• Postils;
• Company Directors’ report;
• Strategic report (not required of micro and small companies).

The annual report has to be submitted to the Companies House. It has to be audited only if the company qualifies as a medium-size or a large company.

Documents required for registering a company in Scotland

To launch the process of registering a Scottish Limited Partnership you will have to supply the following documents:

• Notarized copies of foreign passports for all partners;
• Proofs of their residential addresses (utility bills, rent agreements, etc.);
• Nominee service agreements (if applicable).

As a rule, a company registered in an offshore jurisdiction such as Nevis, for example, is used to act as the General Partner in an SLP. If this company uses nominee services, it will provide for the possibility to maximize the confidentiality of the SLP ownership and minimize the taxes.

Reasons why you should register a company in Scotland

Registering a Scottish Limited Partnership will allow lessening the tax burden if the company founders are not residents of Scotland and the profits are generated elsewhere. Besides, it will improve the image of your business and simplify making international deals. As Scotland is a perfectly ‘clean’ jurisdiction, your interaction with the banks will also become seamless.

A Scottish company will be ideal for the following purposes:

• Acquiring dividends;
• Managing material and non-material assets;
• Trading internationally.

If you would like to expand your business and enter foreign markets, a Scottish Limited Partnership will be an extremely powerful business instrument that can help you achieve your goals as ambitious as they may be. Please contact us by email (you can find our corporate address at the top of the page), use the live chat or the messenger. We will be happy to assist you in forming an SLP and improving your lifestyle.