ABB 2006/7 | Practical Advice | UK Trade & Investment

The US is the UK’s premier destination for overseas investment, and is also its largest export market, taking £30.7bn of UK goods in 2005. Hundreds of UK companies have established offices over there, determined to take advantage of all that this vast market has to offer. The sheer size and scale of the US mean that it should be treated as a series of regional markets with varying characteristics. However, apart from a few import quotas and strategic industryownership restrictions, UK firms face few barriers to doing business in the US.

UK support network

UK Trade & Investment is the government organisation that supports UK businesses wishing to trade internationally and overseas companies looking to invest and expand in the UK. With partner agencies in regions across England and national development agencies in Scotland, Wales and Northern Ireland, UK Trade & Investment provides a first-class network that can help UK companies realise their overseas trading ambitions. Your first point of contact is the International Trade Team at your local Business Link. Made up of International Trade Advisers, from both the private and public sectors, plus their support staff, it will be able to access on your behalf a range of support services to help you explore the US market. It can advise on local business conditions and provide tailored information specific to your needs.

To find details of local Business Link offices, contact the Business Link hotline on +44 (0)845 600 9006.

In the US, we have a network of 14 trade offices, based in commercial sections of the British Embassy and Consulates throughout the country and covering three time zones. These are staffed with US trade experts, with private sector experience, who can advise on local business conditions and practices, help you gain access to key industry contacts, and provide free off-the-shelf lists of local lawyers, accountants, banks, and so on.

What can UK Trade & Investment offer ?

Thanks to our commercial expertise and unrivalled local access and knowledge, we can help UK companies initially assess whether they are ready to do business in the US and then support them in making their first steps into the market. Our services include:

• Targeted outward missions to the US and support at trade shows. We back over 100 US events each year
• Bespoke research and in-depth analysis on sectors in the US
• Industrial knowledge, business contacts and local knowledge of requirements and business practices
• Help in gaining access to US government at federal, state and local levels

Entry requirements

The US currently operates a Visa Waiver Programme (VWP), which enables most British Citizen passport holders to visit the US without a visa if they are travelling on business, pleasure or transit from where they normally reside and intend to stay for less than 90 days. Visa-free travellers, including children, entering the US under VWP require individual machine-readable passports (MRP).

Passports issued on or after 26 October 2005 must contain a digital photograph of the holder. Those issued on or after 26 October 2006 must also include an integrated circuit chip capable of storing the biographic information from the data page, a digitised photograph and other biometric information.

For further details visit the US Embassy website at www.usembassy.org.uk

Work permits

UK companies are cautioned that, due to regular overviews of US immigration policy, regulations can quickly change. It is therefore wise to seek up-todate advice from a US immigration attorney before applying for any visa.

UK firms should carefully select the business visa appropriate for their own and their employee’s long-term needs. For example, some business visas allow the employee to eventually apply for and acquire a permanent resident ‘green’ card, while others do not. Similarly, some visas, but not all, require annual renewal. Moreover, certain visas can only be acquired for a limited number of years.

UK companies should also ensure that employees who frequently visit the US in order to attend trade shows and other business meetings obtain the correct kind of visa.

Forming a company

Given the size of the US market, UK companies often choose to set up a US trading company, or “subsidiary”, to act as the co-ordinator of their other distribution channels, such as sales agents, distributors and strategic partners. When properly established and managed, such a company can provide the following advantages for UK firms:

• Credibility with US customers
• Maximum control over how the brand name and image is established in the US
• Good local contact with US customers
• Good forecasting regarding production and delivery

Company taxation

All goods entering the US are subject to duty on their dutiable value unless specifically exempted by law. A goods dutiable value is determined in various ways. A goods duty varies according to its classification; classification and valuation of goods is the responsibility of the importer. The US Customs Service will then determine the relevant duty. Goods cannot leave the port of entry until this has been done (liquidation). After liquidation, importers have 90 days in which to appeal.

Reductions in the duty on goods which have been imported from the US to the UK and then combined with UK goods are available for the value of components manufactured in the US.

HM Customs and Excise (www.hmce.gov.uk) can help you locate your local Customs Advice Centre and your local Excise and Inland Customs Advice Centre, which is the first line of enquiry for routine tariff classification advice down to the six-digit Harmonised System subheading level, used worldwide. The Customs Classification Helpline can also provide advice on tariff classification numbers. It is open from 08.30-17.00, with a voicemail service available at other times. Tel: +44 (0)1702 366 077.

The European Commission’s Market Access Database gives tariff information for many non-EU countries, including the US. It also has an Exporters Guide to Import Formalities section, which gives an overview of import procedures, as well as any general and specific requirements for a product.

Sales tax

US sales tax is determined state by state. Some states have no sales taxes at all. For more information, visit the website of the Federation of Tax Administrators at www.taxadmin.org/fta/rate/tax_stru.html

Additional taxes

Many US states impose an annual franchise tax on corporations incorporated and doing business there, and that are registered with the Secretary of State. Franchise taxes are usually based on the amount of the capital stock, but can also be calculated on bases such as gross receipt, net income and net worth.

Real estate and personal property are subject to taxes whether or not the property is used in the business. Employees must pay unemployment taxes into a fund that provides compensation payments to the unemployed. The taxes are levied based on the “experience ratings” of the company’s employees. There is also a federal unemployment tax which is reduced by the amount of tax paid to the state.

Grants and assistance US Marketing Scholarship Programme

UK Trade & Investment has been administering the US Marketing Scholarship Programme for the past 10 years. It aims to give senior managers in UK SMEs the opportunity to learn more about marketing effectively in the US and then to spend time with a company to see how it is done.

Successful applicants attend a five-day course at the J.L. Kellogg Graduate School of Management in Illinois and then undertake a short business attachment to a US company. All fees for the residential course and return airfares are covered by the private sector sponsors. Eligible candidates and companies are chosen via a competitive selection process. Places are awarded to those best placed to take advantage of this significant opportunity.

Find out more about the programme, including closing dates for applications, by contacting UK Trade & Investment’s Pippa Lodge on +44 (0)20 7215 4722;
e-mail pippa.lodge@uktradeinvest.gov.uk

Tradeshow Access Programme (TAP)

TAP gives grant assistance to new UK exporters seeking to enter the US and other overseas markets by taking part in overseas exhibitions. Financial support is limited to SMEs.

Eligible companies can receive up to three grants of £1,800 (for separate UK Trade & Investment-supported exhibitions) to help them acquire knowledge and experience of exhibiting effectively in the US, as part of their longer-term export strategy.

Firms can also apply for “solo” grants of £1,500 to exhibit at shows not included in UK Trade & Investment’s programme.

Overseas Market Intr odu cti on Servi ce (OMIS)

OMIS is a worldwide service which puts UK companies directly in touch with UK Trade & Investment’s overseas staff who can provide focused business advice, information and visit support. There are five levels of service priced at £200, £420, £850, £1,250 and £1,700.They are built around the typical requirements of businesses making their first steps into a new overseas market. All provide a flexible blend of preparatory advice and research, and support when you visit the market.

As in other countries, our US experts will propose a programme of support and advice that fits the level chosen. This could include an analysis of possible market-entry strategies, identification of potential business partners, arrangement of appointments, and advice on competitors, local regulation, standards, etc. They might also advise on local publicity or the organisation of local events, and finding relevant tender opportunities.

Additional information

UK Trade & Investment offers a number of helpful publications on doing business in the US. They include: Exhibiting at US Trade Shows, US Product Liability Law, Intellectual Property in the US, Exporting to the USA, Marketing in the USA, Establishing a Business Presence in the US and Selling Through US Agents and Distributors in the US.

All publications can be found at
www.uktradeinvest.gov.uk
To order any publications,
please contact: Allan Attra
Tel: +44 (0) 20 71215 4722
E-mail: allan.attra@uktradeinvest.gov.uk

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