Accountants for US and UK Businesses: What Founders Need on Both Sides

Accountants for US and UK businesses keep one set of books and turn it into two sets of filings: Companies House accounts and a Corporation Tax return in Britain, a Form 1120 and the related information returns with the IRS, and usually a US state return. The harder part is the connection between them: how the companies charge each other, where profits are taxed, how dividends cross the border and how the founder's own returns report the business.

This guide is written for founders and finance leads whose business already sits on both sides, or is about to: a UK company opening in the US, an American company hiring in London, or a founder who owns companies in each country. Personal founder questions such as share elections, EMI options and exit reliefs are covered in our guide to founder tax for a US/UK startup. Here the focus is the business itself.

What do accountants for US and UK businesses actually do?

Accountants for US and UK businesses prepare each company's statutory accounts and tax returns in its own country, then make sure the cross-border pieces agree. The same intercompany invoice appears as income in one company and as a cost in the other, and both tax authorities can ask why it was priced the way it was.

In practice the work falls into four layers:

• Bookkeeping in two currencies. Each company keeps its books in its own functional currency, with intercompany balances reconciled monthly so the two ledgers never disagree. Our bookkeeping and accounting service sets this up from the start.
• Statutory filings in each country. Companies House and HMRC for the UK entity; the IRS and the state for the US entity.
• The cross-border layer. Intercompany agreements, transfer pricing, permanent establishment reviews, treaty claims on dividends, interest and royalties, and information returns such as Form 5472 and Form 5471.
• The owners' personal returns. A US-citizen founder of a UK company reports that company on their own Form 1040; a UK-resident owner of a US LLC has to square how HMRC and the IRS each see that LLC.

A single-country firm can do the first two layers well. The third and fourth layers are why businesses look for accountants for US and UK work who handle both sides as one engagement.

The four common set-ups and the filings each one triggers

Most cross-border businesses fit one of four shapes. The shape decides which forms are due, so it is the first thing a good adviser asks about.

Set-up	Main US filings	Main UK filings	The usual pressure point
UK Ltd with a US subsidiary (Delaware or another state)	Form 1120 for the subsidiary, with Form 5472 as it is at least 25% foreign-owned; state returns	Companies House accounts, Company Tax Return and Corporation Tax for the parent	Pricing of management and sales support between parent and subsidiary
UK Ltd selling into the US with no US entity	Possibly Form 1120-F if it has US business income; state sales tax registrations	Normal UK filings; all profits taxed in the UK unless a US permanent establishment exists	Whether US-based staff or agents create a permanent establishment
US corporation with a UK subsidiary or branch	Form 1120 for the parent, reporting the UK subsidiary	UK subsidiary files accounts and a Company Tax Return; a UK branch registers with Companies House as an overseas company within one month of opening and pays Corporation Tax on its UK profits	UK VAT and payroll from the first UK hire
Founder who is a US citizen owning a UK Ltd	Form 5471 on the founder's Form 1040, and possibly tax on the company's undistributed profits	The company's normal UK filings; the founder's Self Assessment for salary and dividends	US tax on profits the company never paid out

Plenty of groups combine these: a UK holding company, a US operating subsidiary and an American co-founder, for example. Each layer adds its own forms, which is why one view of the whole structure matters more than any single return.

The UK side: Companies House, HMRC and Corporation Tax

A UK private limited company has three regular deadlines, and they do not fall on the same day.

• Annual accounts to Companies House. Due 9 months after the financial year ends, and 21 months after registration for the company's first accounts, according to GOV.UK's guidance on annual accounts.
• Company Tax Return to HMRC. Due 12 months after the end of the accounting period it covers. The Corporation Tax itself is usually payable 9 months and one day after the period ends, so the tax is due before the return (GOV.UK: Company Tax Returns).
• Confirmation statement. Filed at least once every 12 months, within 14 days after the review period ends (Companies House guidance).

Corporation Tax is charged at 25% on company profits, with a 19% small profits rate where profits are £50,000 or less and marginal relief between £50,000 and £250,000. Those thresholds are divided by the number of associated companies, and HMRC counts associated companies wherever they are resident (GOV.UK: Marginal Relief), so a UK subsidiary of a US group can reach the 25% rate at a far lower profit than a standalone business would. A US company that opens a UK branch, rather than a subsidiary, must register that establishment with Companies House within one month of opening (GOV.UK: register as an overseas company). HMRC publishes the current rates on its Corporation Tax rates page.

Two newer obligations catch overseas owners out. First, Companies House began identity verification for directors and persons with significant control on 18 November 2025, with existing directors confirming their verification alongside their next confirmation statement; an American director needs to complete it like anyone else (GOV.UK: verify your identity for Companies House). Second, VAT: a UK business must register once taxable turnover for the last 12 months goes over £90,000, but a business established outside the UK that makes taxable supplies here must register regardless of turnover (GOV.UK: register for VAT). A US company selling services or goods into Britain should check this before its first UK invoice.

The US side: Form 1120, Form 5472 and the states

A US C corporation files Form 1120 by the 15th day of the 4th month after its tax year ends, which is 15 April for a calendar-year company, and pays federal tax at a flat 21% of taxable income (IRS Instructions for Form 1120). A company with a fiscal year ending 30 June files a month earlier, by the 15th day of the 3rd month.

Foreign ownership adds Form 5472. The IRS treats a US corporation that is at least 25% foreign-owned as a reporting corporation, and so is a foreign-owned US disregarded entity such as a single-member LLC owned by a UK company or a UK resident. The form reports transactions with the foreign owner and other related parties: loans, management fees, sales, capital contributions. A disregarded LLC attaches its Form 5472 to a pro forma Form 1120 and cannot file it electronically (IRS Instructions for Form 5472).

The penalty is what makes this form matter. The IRS international information reporting penalties page sets the initial penalty at $25,000 for each failure to file a complete and correct Form 5472, plus $25,000 for each further 30-day period once 90 days have passed after an IRS notice, with no maximum. A dormant-looking LLC that received a single capital injection from its UK owner still has a reportable transaction.

States run their own systems. Incorporating in Delaware does not stop a company owing tax, franchise tax or payroll obligations in the state where its staff actually work, and sales tax registration depends on each state's own thresholds. Our business tax returns service covers federal and state returns together.

One obligation has gone away. FinCEN's beneficial ownership reporting no longer applies to companies created in the United States: the final rule, effective 14 August 2026, keeps the duty only for companies formed abroad that have registered to do business in a US state, and even they need not report US persons (FinCEN: beneficial ownership information). A UK Ltd that has registered as a foreign company in, say, New York or California should check whether it is caught.

How does the US/UK tax treaty affect a business with operations in both countries?

The 2001 US/UK double taxation convention decides which country may tax the business's profits and how much tax can be withheld on payments between the companies. For most growing businesses, three articles do most of the work.

Article 5 and Article 7: where business profits are taxed

Under Article 7, the business profits of a UK company are taxable only in the UK unless it carries on business in the US through a permanent establishment there, and the same works in reverse for a US company in Britain. Article 5 defines a permanent establishment as a fixed place of business through which the business is wholly or partly carried on, and also treats the company as having one where a person habitually exercises authority to conclude contracts binding on it. That second limb is the risk for a UK company with a US-based salesperson who signs customer contracts. Treaty protection also needs to be claimed properly: a foreign corporation relying on it may still have a US filing to make, which is where Form 1120-F comes in (IRS Instructions for Form 1120-F).

Article 10: dividends between the companies

The treaty caps the withholding tax the paying country can charge on a dividend at 15% in general and 5% where the receiving company owns at least 10% of the voting power. Article 10(3) goes further: dividends are not taxed in the paying country at all when the recipient is a company that has owned 80% or more of the voting power for the 12 months ending on the date the dividend is declared. A UK parent receiving a dividend from a wholly owned US subsidiary formed less than a year earlier may therefore face withholding that would vanish if the dividend waited. Article 23, the limitation on benefits article, then decides whether the company receiving the payment is entitled to treaty benefits at all.

Transfer pricing: what should the companies charge each other?

Every cross-border group has intercompany transactions: the UK company's developers build the product the US company sells, the US parent's executives manage the UK team, one company lends the other money. Each of those transactions needs a price, and both tax authorities expect it to be the price unrelated parties would agree.

The UK rules give small businesses a break. HMRC's International Manual at INTM412070 explains that small and medium-sized enterprises are exempt from UK transfer pricing for most transactions, so long as the related party is resident in a territory whose treaty with the UK has a suitable non-discrimination article. HMRC can still issue a notice to a medium-sized enterprise requiring it to apply transfer pricing, and Patent Box claims are an exception. The US side gives no equivalent exemption to the American company, so the US return still needs a defensible basis for the charge.

The practical answer for a young group is short: a written intercompany agreement, a simple method that fits the facts (often cost plus a mark-up for a subsidiary that provides services to its parent), and invoices that match the agreement. That is cheap to set up in year one and expensive to reconstruct in year four.

The founder's own returns: where business and personal tax meet

For many founders the most expensive surprise is personal, not corporate. A US citizen who controls a UK company files Form 5471 with their own US return every year. The penalty for failing to file a complete and correct Form 5471 is $10,000 per form, with further continuation penalties up to a maximum of $50,000 after an IRS notice (IRS penalties page). The UK company may also be a controlled foreign corporation, and its profits can be taxed on the American owner before any dividend is paid, under the regime now called net CFC tested income (formerly GILTI). Our founder tax guide works through that calculation, and the IRS Instructions for Form 5471 set out who must file.

The reverse case is a UK resident who owns a US LLC. The IRS usually ignores a single-member LLC and looks through it; HMRC generally treats a US LLC as a company. The result can be US tax on profits the owner is treated as earning directly and UK tax on later distributions, with no neat match for foreign tax credit relief. This is a structuring question to settle before the LLC is formed, not a filing question to solve afterwards. Property companies raise similar issues, covered in our article on a UK property company for a US citizen.

A first-year compliance plan for a UK company expanding to the US

Illustrative example: a London software company, owned by two UK-resident founders, forms a Delaware subsidiary in March to employ a sales lead in Boston. Neither founder is a US citizen. The steps below show the order in which a joined-up adviser would deal with it.

1. Before forming the subsidiary: confirm the US entity type (a corporation, not an LLC, avoids the UK and US treating it differently), and decide which company employs the sales lead and who signs customer contracts.
2. At formation: obtain the subsidiary's EIN, register it in Massachusetts where the employee works, set up US payroll, and put an intercompany services agreement in place on day one.
3. Monthly: keep separate books for each company, invoice the intercompany charge under the agreement and reconcile the intercompany balance in both currencies.
4. At the US year end: prepare Form 1120 with Form 5472 reporting every transaction with the UK parent, plus the state return, by the 15th day of the 4th month.
5. At the UK year end: prepare the UK accounts and Company Tax Return, counting the US subsidiary as an associated company for the Corporation Tax thresholds, and record the intercompany income on the same basis as the US return.
6. Before any dividend: check the Article 10 holding period so that the dividend can be paid free of US withholding once the 12-month ownership test is met.

None of these steps is unusual on its own. The risk lies in the gaps between them, when the US preparer does not know what the UK accounts say, or the intercompany charge in one return does not match the other. That is the role of a cross-border business adviser.

What do businesses get wrong with US and UK accounting?

• Treating a US LLC as a cheap default. It suits US owners. For a UK owner or a UK parent it often creates a mismatch between the two tax systems.
• Forgetting Form 5472 for a quiet entity. Capital contributions and loans from the owner are reportable even in a year with no trading.
• Letting a US salesperson sign contracts for the UK company. That can create a US permanent establishment and a US tax return the business never planned for.
• Ignoring associated companies. A UK subsidiary's Corporation Tax bands shrink when the group has other companies, wherever they are.
• Pricing intercompany charges after the year end. Agreements written backwards are hard to defend and rarely match the invoices.
• Leaving the founder out. A US-citizen founder's Form 5471 and their tax on the company's profits often cost more than the company's own filings.

How to choose accountants for US and UK businesses

When you interview a firm, ask questions that show whether it really works on both sides:

• Who prepares the US returns and who prepares the UK returns, and how do they share the books and agree the intercompany figures?
• How will you decide whether our US activity creates a permanent establishment for the UK company?
• Which information returns (Form 5472, Form 5471, state filings) will you prepare, and which are excluded from the fee?
• Do you also prepare the founders' personal US and UK returns, so that the company and the owners report the same facts?
• What does a typical year cost? Our article on what a cross-border tax accountant costs explains the usual fee drivers.

US/UK Cross Border Tax is a team of US CPAs and UK tax advisers working as one team, with offices in London, Manchester, New York and San Francisco. We set up and run the company filings, the cross-border layer and the founders' returns together, and we work with founders on both sides of the Atlantic. For a broader view of the day-to-day work, read what US/UK tax accountants do, or contact us to talk through your structure before the next filing deadline.