The reason why some limited companies are registered in England and Wales whilst others are registered in Scotland is because the UK comprises four different countries and three separate jurisdictions (legal systems).
England and Wales share a combined legal system, so these two countries form a single jurisdiction. Scotland and Northern Ireland, on the other hand, are separate jurisdictions with independent legal systems.
Let’s take a look at how this works in practice when setting up and running a limited company in the UK.
A unified company registration system across the UK
Whilst a limited company can only be incorporated (registered) in one jurisdiction, the UK has a single system of company registration. This is because the regulatory framework for company incorporation is a reserved matter (power) of the UK Parliament at Westminster.
To facilitate incorporation across the whole of the UK, Companies House has separate registrars in England & Wales, Scotland, and Northern Ireland. But once a company is formed in one of these jurisdictions, it must thereafter operate in accordance with the laws and regulations of that particular legal system.
- Companies formed in England & Wales – registered at Companies House in Cardiff and subject to English Law
- Companies formed in Scotland – registered at Companies House in Edinburgh and subject to Scots Law
- Companies formed in NI – registered at Companies House in Belfast and subject to Northern Irish Law
Regardless of which part of the UK a company is registered in, the business is free to operate in any UK or overseas country. However, it will still be subject to the laws and regulations of the jurisdiction in which it is registered, as well as those enforced in any other country in which it does business.
Practical differences between companies in England & Wales and Scotland
Company law is broadly similar in every legal system in the UK, but there are certain practical differences to be aware of.
- The registered office (headquarters) of a limited company must always be situated in the jurisdiction in which it chooses to incorporate:
– England & Wales – registered office must be in England or Wales
– Scotland – registered office must be in Scotland
– Northern Ireland – registered office must be in Northern Ireland
- Scots Law and English Law have significantly different insolvency regimes, particularly in relation to procedural rules.
- Scotland’s system of taxation and business rates differ from those in England & Wales. However, the vast majority of tax powers in the UK remain reserved to Westminster, including rates of Corporation Tax, VAT, Personal Allowance, and National Insurance.
- Contract law – English Law and Scots Law are closely aligned in this area, but the execution of contracts differs greatly between England & Wales and Scotland. The is a particularly important consideration for your Terms of Business and the logistics of attending court if you have to enforce the terms of a contract.
- There are significant variations in property law and registering company charges in England & Wales and Scotland.
- Employment law – there are differences in the formation and signing of contracts, third-party rights, holidays, time limitations on claims against employers, and the procedures for employment tribunals and civil court cases.
Whilst many of these variations are minor, you should familiarise yourself with them if you are planning to set up a company in the UK. Contract law, in particular, could play a crucial role in your company and impact the way that you do business with clients and suppliers.
UK-wide company reporting and filing rules
All UK companies have the same reporting and filing obligations for both the registrar and HMRC, regardless of which jurisdiction they’re incorporated in.
This includes the filing of annual account and confirmation statements with Companies House, reporting any change to key company details, filing Company Tax Returns and VAT Returns, and paying all taxes due.
Can I change which jurisdiction my company is registered in?
Once your company has been incorporated, it is not possible to change the jurisdiction that it is registered. This also means that you cannot move your registered office to a different country – but you can move it to a different address within the same jurisdiction.
The only way you can re-domicile a company’s registration is by winding up (closing) the company and incorporating it in a different jurisdiction. Depending on how established your business is, this process could be complex and costly.
A more practical solution would be to base your company in your preferred jurisdiction whilst maintaining its registration and registered office in the country of incorporation. It’s common for companies to establish their operations in other places as their needs change, so this option is worth considering if it could benefit your business.