UK market entry for machinery manufacturers: the three routes compared
You have a machine that sells well across Europe, a UK enquiry sitting in your inbox, and no clear answer to the question your finance director will ask first: who is actually going to import it, and what does that commit us to?
Most manufacturers answer that question by accident. They pick whichever route the first serious UK contact happens to offer, and only later discover what it costs them in margin, in control, or in liability. There are really only three routes into Great Britain, and the differences between them are structural rather than commercial. This is what each one actually obliges you to do.
Route one: sell to a UK distributor who takes title
The distributor buys the machine from you, resells it under their own terms, and carries the stock. Commercially it is the lightest route: you invoice one customer, in your own currency if you can negotiate it, and you are out of the transaction at the port.
The consequence people miss is that the distributor is almost always the importer, and the importer carries duties in their own right under the Supply of Machinery (Safety) Regulations. That is not a paperwork detail. It changes who a UK enforcement authority speaks to first, and it changes what your distributor will demand from you in the supply agreement. We set out that division of risk in detail in importer of record: who actually carries the risk on your UK machine.
What you give up is visibility. You see the distributor’s forecast, not the end user’s. You have no direct relationship with the operator who will decide whether your next machine is a repeat order. And your pricing to the end market is no longer yours.
This route suits you if: your machine is broadly standard, the aftermarket is straightforward, and you would rather buy market access with margin than build it with capital.
Route two: appoint a commercial agent
An agent does not buy anything. They introduce or negotiate sales on your behalf, and you invoice the UK customer directly. You keep the end-user relationship, you keep pricing control, and you pay commission on what actually sells.
You also import. If you are selling directly to a UK buyer, the customs and tax obligations land on you rather than on an intermediary, and that is where two GOV.UK requirements bite. First, a business that is not established in the UK has no VAT registration threshold at all: HMRC’s guidance states that non-established taxable persons “must notify HMRC of their liability to be registered regardless of the value of the taxable supply” (VATREG37050). The £90,000 figure UK businesses talk about does not apply to you. Second, you need an EORI number to move the goods, and if you are not eligible to hold a GB EORI yourself, GOV.UK is explicit that you “will need to appoint someone to deal with customs on your behalf” (Get an EORI number).
The larger consideration is the one that surprises European manufacturers least and British ones most. UK commercial agents are protected by the Commercial Agents (Council Directive) Regulations 1993. On termination, regulation 17 entitles the agent to indemnity or compensation, and unless the contract says otherwise the default is that the agent “shall be entitled to be compensated rather than indemnified” (SI 1993/3053, reg 17). Where an indemnity is agreed instead, it is capped at one year’s average annual remuneration over the preceding five years, and the agent must notify you within one year of termination if they intend to claim.
Read that as a planning fact rather than a warning. An agency relationship you may want to end in three years has a cost attached to ending it, and that cost is best priced at the start.
This route suits you if: the sale is technical and consultative, the end-user relationship is the asset, and you can support UK customers directly once the sale is made.
Route three: establish in the UK
The third route is to be here. In practice that means one of two things, and they are not the same filing.
A UK establishment of an overseas company is your existing company operating through a UK presence. It is registered at Companies House on form OS IN01, and the deadline is tight: GOV.UK states you must file “within one month of the opening of the UK establishment”, with the fee, a certified copy of your constitutional documents, and certified English translations where they are needed (Overseas companies registered in the UK). Directors must also verify their identity with Companies House.
A UK subsidiary is a separate UK company that you own. It contracts in its own name, holds its own EORI and VAT registration, and can be the importer of record without the parent taking that role. It is more work to set up and more work to run, and it is the only one of the three routes that gives you a UK balance sheet.
Establishing removes the compromises in routes one and two. It also front-loads cost before you have proven the market, and it commits you to UK employment, accounting and compliance obligations that you cannot pause when a quarter goes badly.
This route suits you if: the UK is already producing revenue you would rather not share, field service coverage is a competitive requirement, or your machine cannot be sold without a local presence behind it.
How the three actually compare
| Distributor | Agent | Establish | |
|---|---|---|---|
| Who imports | Distributor | You, or your appointed representative | You, or your UK company |
| End-user relationship | Theirs | Yours | Yours |
| Pricing control | Limited | Full | Full |
| UK VAT registration | Not usually | Yes, from the first supply | Yes |
| Cost to exit | Contractual notice | Reg 17 compensation or indemnity | Wind-down of an entity |
| Capital required | Lowest | Low | Highest |
The decision is usually sequential, not final
The most common pattern among manufacturers who end up with a durable UK business is not a single decision at all. It is a distributor or agent for two to three years, then establishment once volume justifies it. What breaks that sequence is signing a first-route agreement that makes the second step expensive: exclusivity with no performance conditions, an indefinite term, or an agency contract silent on regulation 17.
Whichever route you take, the compliance floor is the same. The machine must carry the right conformity marking before it is placed on the GB market, and that obligation does not move just because your commercial structure does. Our guide to UKCA marking for machinery sets out what that means in practice.
This article is general information about UK market entry and is not legal, tax or compliance advice. Requirements change and individual circumstances differ, so take professional advice on your own position before acting.