Setting up a business bank account as an expat is not always easy but it is possible. Here are some tips on how to do it.
I often hear expats complaining about the lack of viable options when it comes to opening a UK business bank account for their UK property development business. In addition, the process of obtaining such an account is always long, arbitrary and almost certainly going to involve a flight back to the UK. You would have thought they could have streamlined this process by 2018, but increasing regulation has sought to backtrack this, leaving expats incredibly frustrated.
The good news is that you don’t actually need a UK bank account to run a UK business (though you will for investing via a limited company). You can operate your business using your local bank account.
I know this may not be ideal, as you will undoubtedly need to do a lot of international transfers which can take time and be expensive, along with managing any currency exchange risk. You will also need to consider your tax position. Then again, this does mean that you can set up straight away and still have a functioning business while opening your UK bank account.
I am now (hopefully!) nearing the end of my bank account opening journey. I started the process back in December and now, four months later, HSBC ensures me that I am at the last hurdle. I know, famous last words!
To ensure fellow expats do not have to go through the same pain and agony that I went through, I have outlined below the options available (and not available) to expat property developers, along with some top tips, so hopefully you can fast track your journey.
- Internet-based bank account providers
Digital business bank, Tide, seem to be on the up with promises of getting you set up quickly. Tide seems to be a good option, claiming to have a very straightforward bank opening procedure, but has a maximum account balance of £100k and a combined monthly transaction limit of £200k. You can request for these limits to be extended on a case-by-case basis. This would have been one of the options that I would have looked at if I wasn’t already quite far down the line with HSBC.
- Offshore accounts
You do have the option to set up a bank account in the Isle of Man, Guernsey or Jersey. These accounts can be denominated in sterling and operated in a similar way to an onshore account. Conversely, the process of setting up these accounts can be just as laborious as the onshore accounts, requiring much the same in terms of documentation and tick box checklists.
- Company formation service providers
Many company formation service providers offer to help you obtain a bank account whilst incorporating your company for you for a fee. This could be a way of removing some of the headaches as they will be able to offer you advice on which bank accounts you would be eligible for, but as far as I am aware, none of these agents have the power to fast track applications, meaning that you could still be in for the long haul.
- The Big Banks
Lloyds and Barclays International
From my experience, an absolute non-starter! As soon as you mention “property development” or “property investment” their computer definitely does say no!
When I spoke to RBS they said that the combination of being an expat and carrying out a property development business would result in any application I made being declined. They did mention that if one of the business owners were based in the UK, it may be worth applying, but they didn’t sound too hopeful.
This is the option that I chose to pursue, being the only option that was effectively available to me. The online form was straightforward (took around 20 minutes), and their KYC (“Know Your Client”) app seemed to work fairly well. I only needed to submit my documents (passport and proof of address) twice!
Two weeks later, the KYC had been verified and I was on to their review process. The review process promised to be completed within three weeks. I was ever hopeful. Five weeks later, after numerous calls to HSBC, I was finally passed onto a “specialist” who asked me a series of questions about my initial capital contribution (I had put on the form that I was going to add £125k to the account once it was opened to start funding my property development projects).
This triggered some internal alarms bells as the capital injection was above their “safe” limit and required further verification that I wasn’t an international drugs or arms dealer.
I offered to send them any document they needed to prove that I was in fact a legitimate business person. They didn’t want documents, instead they wanted to see me face to face in one of their business branches. It just so happened that I was in the UK, but I was flying back the next day.
Could I possibly see them today? Of course not, that would be too easy. So I staged a protest in the HSBC Exeter branch, refusing to move until the situation had been resolved. It turns out that all they actually needed was proof that the funds were from my salary. Why I could not have done this remotely, I do not know. I’ve now submitted bank statements proving source of funds. Hopefully, this will satisfy them and my account will be open soon.
If I hadn’t triggered the internal capital injection limit I would like to think that I would have an account open by now, but that could just be wishful thinking.
I want to leave this article on a positive note. I know lots of expats that have been through this process, and while it is long and tedious, all have managed to get an account open. It can be done, you just need persistence! Here are some top tips to help you streamline the bank opening procedure:
Top Tip 1: The KYC process is always easier and quicker if you have an address in the UK. I would recommend getting a UK address as it will come in handy when applying for finance as well as opening bank accounts. Without it, be prepared to fly back to the UK to complete KYC formalities.
Top Tip 2: If you have lots of shareholders in your company, or if you are setting up separate legal entities for each development project, add the people who are going to be managing the accounts first, then open the bank account before adding the rest of the shareholders. This will reduce the amount of KYC that the banks have to do, especially if those other shareholders are expats.
Top Tip 3: It helps if any of the shareholders or directors of your company are based in the UK, and are therefore, more accessible to the banks.
At the time of writing this article the information was accurate, however, rules and requirements change quickly in this area. More options may become available and existing options may become more challenging. Also, be sure to check the small print regarding the fees and charges on bank accounts. Good luck with your journey!