If your business is based outside the UK, it is necessary to register for UK VAT if it intends to or currently makes supplies of goods or services to UK customers, where the place of supply is classed as being the UK. This is one of the most basic rules of trading legally in the UK for overseas businesses.

Unlike British companies, overseas businesses do not have the benefit of being able to wait until their sales exceed a certain threshold before having to register for VAT, meaning this is a process that needs to be completed as a matter of high priority.

Failure to register for VAT can result in significant financial penalties. If trading via an online marketplace, it is also likely to result in the platform operator acting against the business.

Here, we explore the basic steps that must be taken for an overseas company to register for VAT, and some of the factors that businesses should consider to make this process as smooth as possible.

When to register for VAT

If your business is based outside the UK, you are required to register for VAT as soon as you make any supplies of goods or services that are subject to UK VAT under the place of supply rules.

Failure to do so means you will need to pay HM Revenue & Customs (HMRC), the UK tax authority, any VAT your business owes from the date on which you should have VAT registered. Your business may also incur a financial penalty for failing to notify HMRC of registration at the correct time.

For businesses that are based in the UK, a minimum threshold applies before VAT registration is required. The same threshold DOES NOT apply to non-UK established businesses, creating an immediate liability to register as soon as a single supply of goods or services is made, and where the place of supply is classed as being the UK.

How the VAT registration process works

Registering for VAT is generally undertaken by an online application, although there may be a handful of situations in which a paper application form would be sensible - for example, if there is a complex background issue to the registration, or a mandatory requirement from HMRC.

Generally, overseas businesses are required to provide evidence to satisfy HMRC that they meet stringent anti-money laundering checks and are a credible business, which can make the registration process more complex. Once the registration process is complete, your business will be assigned a VAT registration number from HMRC.

What happens next?

Once you have registered for VAT, you will be expected to submit your VAT returns online to HMRC and pay your VAT returns, based on the current rate of VAT in the UK applicable to the goods or services that your business supplies.

Consult the official HMRC website to check the current VAT rate.

How can VAT registration details be changed?

You will need to keep your VAT registration details up to date by informing HMRC of any relevant changes to your circumstances, including:

  • Changes to the name, trading name or main address of your business
  • A change to the accountant or agent who deals with your VAT
  • Changes to the members of a partnership
  • A switch in your current banking details

You must inform HMRC of these changes within 30 days or face a financial penalty; in the case of changes to banking details, this must be done at least 14 days in advance.

It is also possible to transfer a VAT registration from one business to another when a merger or buyout happens, which may require the previous owner to cancel their VAT registration before moving your number across. This process takes around three weeks to complete.

Ceasing to trade in the UK

If your business ceases to trade in the UK, it can apply to deregister for UK VAT. Please note that deregistration can result in more VAT being owed to HMRC in certain circumstances. It is always worth taking advice on this point before applying to deregister.

Find out more

If you require advice on the VAT registration process or the UK VAT status of supplies made by your non-UK-established business, or you require a professional agent to help manage your dealings with HMRC, give The VAT People a call. Our expert team has decades of experience in all aspects of UK VAT and will be able to advise you on the best way forward.

Call our free VAT helpline on 0333 3638 012 to speak to one of our expert VAT consultants if there is a specific question you would like to ask.

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