Understanding UK-US regulatory terminology can help build stronger business relationships
Familiarity with the differences between regulatory climates can help strengthen relations and increase the ability to navigate global challenges with greater success.
"Each time I must choose between you and Roosevelt, I shall choose Roosevelt." These were Winston Churchill’s words to France’s Charles de Gaulle shortly before D-Day, signifying the strength of the British-American alliance. Even now, as Britain considers its future relationship with the European Union, many of its citizens agree there is still one country they will never walk away from.
The UK is the single biggest contributor of foreign direct investment in the US (approximately US$42bn), and the US gladly returns the compliment (approximately US$16bn). However, despite the mutual respect and trust, shared trade opportunities and common language, a few regulatory matters still manage to get lost in translation. Here’s a brief list of the concepts that can stymie people on either side of the pond as they conduct business between the two countries.
- Public records – in the UK, Companies House requires incorporated entities to publish business financial data and personal details of the ultimate beneficial owner(s) on public record. But in the US, all financial and ownership data are retained by the IRS and kept out of the public domain.
- Statutory audits – the UK requires an audit under statute should the subsidiary and/or its parent fall foul of the rules by virtue of its size.
- State taxation – as if it wasn’t bad enough tackling US federal laws and regulations, there are a further 50 states’ individual taxation policies to contend with.
- Sales tax is not VAT – VAT in the main is a recoverable tax for businesses in the UK. Sales and use tax is not its equivalent in the US and is a direct cost for a business.
- LLC = LLP = LTD = INC – don’t assume that a US limited liability company (LLC) or incorporated business (INC) is the equivalent of a UK limited company (LTD), or that a limited liability partnership (LLP) is the same in each country.
- Employment rights – the UK has protective rights for employees, while the US employs ‘at will’. Neither is simple.
When engaging in US-UK trade, it’s wise to acknowledge and understand the differences in the two countries’ laws and customs, and the terms above are a good place to start.
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