Entrepreneurs are required to exercise due diligence when conducting their transactions. In this regard, companies are primarily required to verify their business partners, especially foreign ones, as cross-border trade is more susceptible to irregularities. Failure to verify a business partner, especially if they later prove to be unreliable, can result in tax, criminal, and tax penalties for the entrepreneur. How to check a company from the United Kingdom, which has not been a member of the EU since February 2020?
Exercising due diligence in verifying a business partner
In today’s times, starting a company is very easy. In many countries, you can do it without leaving your home, via the Internet. Therefore, you can never be sure who is really behind the created name and entry in the register until you check it. Verification involves actions commonly used in business intelligence, primarily consisting of checking the reliability and up-to-date documentation of the business partner, including the National Court Register (KRS), Tax Identification Number (NIP), REGON, as well as permits and certificates necessary for conducting a specific type of activity.
Verification can be done by obtaining information from the relevant individuals and institutions, such as registry courts, Social Insurance Institution (ZUS), tax offices, national and international chambers of commerce. It is worth delving into the history of the business and its owners, including opinions about the company, by searching the Internet or asking other entrepreneurs and business partners of the entity, as well as directly contacting the interested party. It should be remembered that failing to exercise due diligence in selecting a business partner carries legal consequences, such as being accused of knowingly participating in irregularities, leading to further tax and legal sanctions.
Business cooperation with the United Kingdom
Many Polish entrepreneurs consider establishing cooperation with British companies. The United Kingdom is the second-largest economy in Europe after Germany and the sixth-largest in the world. After leaving the European Union in 2020, the United Kingdom recorded a GDP growth rate of 7.4% (2021). The unemployment rate in the UK hovers around 3.8%, and the value of foreign trade turnover in 2021 was £1,279 billion (an 11% increase compared to 2020), with exports valued at £625 billion (a 10.9% increase compared to 2020) and imports valued at £654 billion (a 12.5% increase compared to 2020). Particularly impressive to Polish entrepreneurs are the values of foreign direct investments in the country of operation – £1.7 billion in 2020, and the cumulative value of foreign direct investments in the country of operation – £1.9 trillion in 2020.
In addition to being one of the largest and most developed economies in the world, the United Kingdom is also one of the world’s most important commercial and financial centers, especially London’s City. Several issues related to Polish-British economic cooperation are regulated by the Agreement for the Avoidance of Double Taxation dated December 16, 1976, and the Agreement on Mutual Promotion and Protection of Investments dated December 8, 1987. However, after the United Kingdom’s exit from the EU and the so-called transition period, which started on January 1, 2021, its economic relations with EU member states, including Poland, are governed by the Trade and Cooperation Agreement (TCA), which defines mutual conditions for the trade of goods and services. Customs controls apply at the UK border, and entrepreneurs must complete customs formalities, including having an Economic Operators Registration and Identification (EORI) number, submitting declarations and customs declarations, as well as paying taxes and duties. However, according to the aforementioned agreement, all goods have a 0% customs duty rate. The EU and the UK have agreed to mutual recognition of the Authorized Economic Operator (AEO) status, allowing companies from both territories to benefit from additional customs simplifications. All of this encourages Polish companies to cooperate with businesses in the UK. The volume of foreign trade between the two countries in 2021 amounted to PLN 87.3 billion (EUR 19.1 billion), with imports at PLN 20.9 billion (EUR 5.4 billion) and exports at PLN 66.4 billion (EUR 14.5 billion).
Every responsible entrepreneur should conduct business intelligence before entering into cooperation, which means verifying a business partner from the United Kingdom. Below, we provide guidance on how to check a company from the UK.
National and EU sanctions
As reported by “Rzeczpospolita,” citing the British portal Inews, almost since the beginning of the war in Ukraine, the United Kingdom has been conducting secret talks with Russia, covering not only security issues but also economic matters, such as grain shortages. However, despite strong condemnation of Russia for its armed attack on Ukraine, the British, like many other countries, cannot completely sever their ties with Russia, especially in economic terms, due to Russia’s position in the world in terms of supplies, such as oil and gas.
And economic ties have been of great importance to Polish companies since February 2022, when the Russian-Ukrainian war broke out. They must be even more cautious in their cooperation with foreign partners, including British business partners. On June 23, 2023, the European Union imposed its 11th package of sanctions on Russia. Poland has also imposed additional sanctions. These sanctions target key individuals in Russia, as well as companies from Russia and Belarus. Trade in goods and services with Russian and Belarusian companies is prohibited. Polish entrepreneurs who violate these sanctions may face a financial penalty of up to PLN 20 million and up to 15 years of imprisonment. However, Russian and Belarusian entrepreneurs have learned to circumvent international bans. They use complex holding structures established in other countries, making it difficult to detect the true ownership structure.
Detailed information on the types of transactions subject to EU sanctions with Belarus and Russia can be found on the European Council’s websites: https://www.consilium.europa.eu/. The Official Journal of the EU can be found at the following address: https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX%3A02014R0269-20220721. The Polish Ministry of Internal Affairs and Administration also maintains an up-to-date register of entities subject to sanctions, where you can check a business partner, their connections, reasons for inclusion in the register, and the sanctions applied: https://www.gov.pl/web/mswia/lista-osob-i-podmiotow-objetych-sankcjami.
Therefore, the first step in checking a company from the United Kingdom can be to see if it appears in any of the above registers. Useful information can also be found in Regulation (EU) 2022/576 of April 8, 2022, amending Regulation (EU) No 833/2014 concerning measures to restrict actions by Russia that destabilize the situation in Ukraine.
Economic Intelligence: How to Verify a Business Partner from the United Kingdom?
The verification of a business partner and their potential connections to Belarus or Russia can be entrusted to a professional economic intelligence agency specializing in such tasks. A private detective in Warsaw, Poznan, Wroclaw, or other cities will know how to obtain the necessary verifying information about your current or future business partner.
The most crucial method for verifying a business partner and their potential ties to Belarus or Russia is to determine the real beneficiary of the entity and then check whether they are listed on the sanctions list maintained by the Ministry of the Interior and Administration (MSWiA). You can make these determinations in the Central Register of Ultimate Beneficial Owners maintained by the Minister of Finance: https://crbr.podatki.gov.pl/adcrbr/#/wyszukaj.
Environmental Intelligence
One readily available method for obtaining information about a business partner is to search the resources of the internet. You can verify a company, check if it has a website, read reviews about it, and perhaps come across some publications related to it. If you are not inclined to do this on your own for assurance, you can entrust this research to a detective agency specializing in professional economic intelligence. There are many more sources of information than just the World Wide Web. You can also inquire with the Polish Embassy in London about a specific entity, whether complaints from other entrepreneurs have been received, or whether, according to the knowledge of the diplomatic mission, the British business partner has a bad reputation. Similar information can be obtained from British-Polish chambers of commerce.
Direct Inquiry to the Business Partner
In cases where it is difficult to determine the ownership structure of a business partner through available registers, you can use another method of verification within economic intelligence activities, which is to contact the partner directly to confirm who their real beneficiary is. Of course, to validate the response, you can request the British entrepreneur to provide documents confirming their declarations.
Polish and EU Registers
The Ministry of Entrepreneurship and Technology, as the minister responsible for the economy, maintains a register of foreign entrepreneurs’ representatives in the Bulletin of Public Information. If you find the representation of your business partner in this register, you can assume that they are still in existence and conducting business.
Another such register where you can check a business partner is the European VAT taxpayer register and the EORI register. Companies and individuals wishing to conduct business activities within the European Union must use an EORI number. This is an identification number required in all customs procedures. The VAT Information Exchange System (VIES) is a search engine run by the European Commission that allows you to check whether a particular entity is registered as conducting intra-community transactions. This is essential, among other things, to apply a 0% VAT rate to a specific transaction. If VIES does not confirm the registration of your business partner, you can request verification from the tax office of the country where they are based. It is also worth checking whether a company has the necessary permits and certificates if they are required in a particular country.
The Register of Insolvent Debtors allows you to check whether a given business partner is on its list. There are also economic information bureaus that have detailed information about business activities. BIK, the Credit Information Bureau established by the Polish Banking Association, collects data on the credit history of bank customers, credit unions, and even non-bank loan companies.
British Business Registers
The primary source of data about foreign entrepreneurs is their national registers, equivalent to the Polish CEIDG and KRS. How to check a company from the United Kingdom? There are two main registers in the United Kingdom. The first is the state register of economic activity (“Business register”) for the United Kingdom, including England, Wales, Northern Ireland, and Scotland, maintained by the Companies House. This is the equivalent of the Polish National Court Register. Companies House registers and dissolves limited companies. It gathers information about companies and makes it publicly available. The register contains information provided by capital companies, limited liability partnerships, limited partnerships, foreign companies, European economic interest groupings, companies resulting from cross-border mergers, and European companies (Societas Europaea). There are over 4 million limited companies registered in the UK. Over 500,000 new companies are registered each year. Registrations for companies in England and Wales are carried out in Cardiff. Registrations for Scotland and Northern Ireland are carried out in Edinburgh and Belfast. The Companies House Chamber of Commerce in London provides company search services. You can also submit documents related to the company here.
Access to the register is free, and basic information about companies contained in it is also free to download. The register does not contain information about individuals conducting economic activities (sole traders), general partnerships, or the names of economic entities. The “business register” maintained by the Chamber of Commerce is available in English and Welsh (also known as “cymraeg”): https://find-and-update.company-information.service.gov.uk/.
Almost all actions related to financial services must be approved by the Financial Conduct Authority. FCA is the regulatory authority for about 50,000 companies providing financial services and those related to the financial market in the United Kingdom, as well as a prudential supervisory authority. FCA recommends conducting due diligence on companies and checking business partners from the United Kingdom as part of responsible economic intelligence. Through the register provided on its website https://register.fca.org.uk, you can check whether a particular person or company from the UK is registered. The register contains a list of all companies and individuals engaged in regulated activities. You can find out what their duties are and what protections are available to the client, for example, from Poland, when conducting business with them. The FCA register is available only in English.
From the other British registers, the “Companies in the United Kingdom” register is recommended, providing basic information about companies, such as financial data, company documents, and enabling tracking of changes in companies: https://www.companiesintheuk.co.uk/.
It is better to thoroughly verify your business partner
It is essential to remember that British registers do not provide information on all forms of conducting business, as in the case of the Companies House register, which does not cover sole proprietorships or general partnerships. The British place great trust in the deterrent power of penalties, which are intended to discourage entrepreneurs from providing false information in the register of companies. Before entering into a transaction or partnership with a new business partner, it is advisable to conduct economic intelligence and thoroughly check them, especially for any ties to Belarus or Russia. Violating bans on certain types of trade with these countries and specific individuals and companies can result in a financial penalty of up to PLN 20 million and imprisonment ranging from 3 to 15 years. In addition, verifying a business partner and exercising due diligence in their selection is a requirement that always applies when conducting business activities, resting on entrepreneurs as professional market participants.
Do you now know how to check a company from the United Kingdom? If not, or if you need to find more detailed information, we can assist you. Please feel free to contact us.
