VAT Registration in the UK

VAT registration in the UK becomes mandatory when the British company’s total taxable turnover exceeds a certain amount and, in some cases, for foreign companies. Registrations are submitted to the HM Revenue and Customs, and the use of an agent is possible when you apply for a VAT number in the UK. In this article, our lawyer in England lists two common scenarios for those who register for VAT in the UK.

UK VAT registration for a foreign company

When the following three conditions are simultaneously fulfilled, a company doing business here must register for VAT in the UK regardless of its total taxable turnover:

• The individual offering goods or services is based outside of the UK (for natural persons);
• The business is based outside the United Kingdom;
• The company supplies goods or services to the UK (or is expected to do so within the next thirty days).

When a company’s sales within the UK fall under the scope of those exempt from VAT, it will not have to (not be able) to register with the HM Revenue and Customs (HMRC). Please see below examples of exempt goods and services.

Additionally, a foreign company will generally not need to apply for a VAT number in the UK when it is an overseas seller that makes all its UK sales through an online marketplace.

For foreign companies that do need to register, the process usually takes place online, and it involves the submission of several documents and key information (such as the address of the principal place of business, located abroad). Our lawyers can give you more details on how to register for VAT and the non-established taxable person in the UK.

Alternatively, a company (whether foreign or local) may choose VAT registration in the UK on a voluntary basis, even when its turnover does not exceed £90,000 in the last 12 months.

Our lawyer in the UK can give you more details about tax compliance and registrations in the case of foreign companies, such as those that open a branch in the UK.

VAT registration for a local company

A UK-incorporated business will apply for a VAT number in the UK if:

• Its total taxable turnover exceeds £90,000 for the last 12 months (this is the currently applicable VAT threshold in the UK);
• It expects to exceed the VAT threshold within the following 30 days. If this is the case, the registration must take place by the end of the respective 30-day period. The effective date is the one on which the company realised the turnover, not the date the turnover exceeded the limit.

Businesses that register for VAT later will pay this tax on any sales made since the date they should have registered on.

Companies do not need to register for VAT in the UK when they offer goods or services that are considered “out of scope”. Our lawyer in London lists some of these:

• goods or services bought and used outside the UK;
• goods sold as part of a hobby;
• charity donations.

VAT is not charged on exempt goods and services. These include:

• financial services, investments, insurance;
• property, land, and buildings;
• antiques;
• healthcare, medical treatment;
• sports;
• education and training (except for private schools);
• gambling, and others.

VAT rates and filing in the UK

Companies that follow the process for VAT registration in the UK should also know what the currently applicable VAT rates are. Our team lists them below:

• The standard rate is 20%;
• The two reduced rates are 0% and 5%.

VAT returns are usually filed quarterly. Penalties are in place for those who fail to submit their VAT return by the due date and those who do not pay the due amount.

Do you require assistance with company formation in the UK? Our lawyer in London can give you complete details about the incorporation process and will assist as needed along the way. Once your business is up and running, you can discuss tax and VAT matters with our team as it becomes relevant to register for this tax.

Contact us if you want to know more about VAT registration in the UK.