Foreign companies are facing difficulties in navigating through their UK tax obligations, especially when it comes to VAT registration. With the new post-Brexit regulations and cross-border e-commerce becoming increasingly complicated, many overseas businesses are left with a simple but pertinent question: do they need to register for VAT in the UK?
Let us learn more about when overseas companies must register for VAT, the thresholds and exemptions that apply, and what they must do to stay compliant. Whether you’re selling goods to UK consumers or offering digital services, it’s important to know your obligations under UK VAT law.
When VAT Registration Is Necessary
Overseas companies will typically have to register for VAT in the UK if they:
- Supply goods or services directly to UK consumers
- Store goods in the UK for sale (including by fulfilment warehouses)
- Bring products into the UK for resale
- Provide electronic services to consumers in the UK (B2C)
You do not need a VAT threshold as a non-established taxable person (NETP). That is, one single taxable sale in the UK may require you to register. As opposed to companies in the UK, foreign firms must register from the first sale or taxable activity.
E-Commerce and Online Sales
Overseas e-commerce operations based on websites such as Amazon UK or eBay also have VAT liabilities. If your products are warehoused in UK fulfilment centres, for example, through Amazon’s FBA programme, registration for VAT is required. Some sites can also insist on evidence of your VAT registration to enable trading to continue.
Digital services providers—such as those offering streaming, software, or e-learning content services—are needed to register if they sell directly to UK consumers. Since the UK is now no longer part of the EU VAT MOSS system, registration will have to be separately made with HMRC.
Distance Selling and Import One Stop Shop (IOSS)
The UK is no longer subject to EU distance selling rules. As a result, EU businesses selling to UK shoppers must register for VAT separately if goods are being imported into the UK. For imports of £135 or below, VAT must be charged at the point of sale. VAT registration is required.
IOSS does not cover UK sales. Therefore, EU sellers cannot use it as a loophole for UK VAT compliance and instead must comply with local rules.
Registration for VAT
Overseas businesses can register online on the HMRC website or to appoint a representative to handle their VAT issue. Documents to be provided include:
- Incorporation documents and company details
- Description of business activities being carried out in the UK
- Details of goods or services to be sold
Once registered, you’ll receive a VAT number and may be required to submit regular VAT returns, usually quarterly.
Maintaining Compliance After Registration
Once a foreign company is VAT registered, it must:
- Charge VAT on taxable sales made in the UK
- Submit VAT returns and pay any VAT due
- Keep accurate VAT records
- Notify HMRC of any changes to business structure or operations
Failure to keep up to date with compliance will incur penalties, interest charges, and reputational loss, especially in competitive areas like property and online retail.
Conclusion
Understanding how and when to be registered for UK VAT is crucial for international businesses trading in the UK. Be it online purchases or inventory kept locally, plenty of conditions exist that can severely impact your business.
If your company is doing taxable business in the UK, consulting a professional or hiring a VAT expert will guarantee complete compliance and prevent costly errors. Taking proactive steps towards handling your VAT obligations facilitates easier operations and creates confidence among UK customers and authorities as well.
