The domestic market is often only the starting line for many UK SMEs. In 2025, this push to expand overseas has reached new heights-from the UK’s high-value professional services and burgeoning tech sector to the resilient manufacturing base looking to widen supply chains.
At Kaiser Solicitors, we believe that going global should be a strategic move and never a legal gamble. Too many SMEs consider the law as an afterthought or, rather, a “day two” problem. In practice, the legal foundations you provide before you ever ship your product or hire your first employee overseas will determine your future profitability and risk profile.
The Entity Trap:
The Protection of the Subsidiary:
A subsidiary is a separate legal entity (e.g., a French SAS or a Delaware LLC) owned by your UK parent company. This structure creates a “corporate veil” that shields the UK business from most liabilities incurred by the overseas unit.
| Feature | Overseas Branch | Overseas Subsidiary |
| Legal Status | Same legal person as UK company. | Separate legal person. |
| Liability | UK parent is directly liable. | Liability usually limited to the subsidiary. |
| Taxation | Complex (UK company pays foreign tax). | Separate (Subsidiary pays local tax). |
| Set-up Cost | Low. | Moderate to High. |
| Local Perception | Often seen as “foreign.” | Seen as a local, committed player. |
Employment Law:
The Myth of the “UK Contract Overseas”:
A common pitfall is sending a UK employee abroad or hiring a local person on a UK-style employment contract. Most jurisdictions have “mandatory laws” that override whatever is written in your contract.
The Rise of the “Nomad” and Remote Work Risk:
Intellectual Property (IP): The “First-to-File” Danger:
Your brand name, your patents, and your software code are likely your most valuable assets. Yet, many UK SMEs assume their UK trademark protects them globally. It does not.
Territoriality:
IP rights are territorial. If you have not registered your trademark in the United States or China, a local firm can legally register it before you and then sue you for using your own name in their territory.
Financial and Tax Compliance:
The “Amazon” or Marketplace Pitfall:
If you sell through digital marketplaces, they are increasingly required to collect tax on your behalf. However, the ultimate responsibility for the correct “Origin and Destination” classification remains with you.
Transfer Pricing:
If your UK parent company sells goods to its US subsidiary at a price that is too high or too low, you could be investigated for transfer pricing violations. This requires a formal “Arm’s Length” study—a legal and accounting requirement that many SMEs overlook until an audit happens.
Conclusion:
Expanding overseas is a test of an SME’s maturity. The firms that succeed are the ones that recognise that legal compliance is not just about avoiding fines; it is about building a “trusted brand” in a new market. Kaiser Solicitors is ready to be your legal thought partner. Contact us today to get a free consultation from our international business team.
