UK VAT for non-UK businesses
If you're based outside of the UK the rules on when you need to register and charge VAT can be complicated. In this post we go through the rules and provide a couple of illustrative examples for the most common scenarios.
What is VAT?
Value Added Tax (or VAT) is a tax charged to customers at the point of sale, much like Sales Tax in the US and South Africa, GST in Canada, etc. The rate of VAT charges is based on the type of goods or service sold. The 'Standard' rate (20%) applies to most goods and services but some are 'Zero Rated' (0%) items such as children's clothing, books, coffee. There are two additional categories which rarely apply to ecommerce sellers, namely 'Reduced Rate' (5%) e.g. electricity, and 'Exempt' e.g. insurance.
When do I have to charge VAT?
You must charge VAT on sales from the date you are VAT registered. You can register voluntarily for VAT at any time, but there are some scenarios where you must register.
When do I have to register for UK VAT?
The most common scenarios where a non-UK business has to register for VAT are:
- You are an EU/EEA based company and you either ship goods from the UK or you exceed the UK distance selling threshold of £70,000 in any calendar year (Jan-Dec)
- You are a non-EU based company and you store goods in the UK, e.g. you use an Amazon UK fulfilment centre
When would I not need to register for UK VAT?
The most common scenarios where you do not need to register are:
- You are based anywhere in the world and the goods are shipped from outside of the EU/EEA and sent directly to consumers in the UK. See our post on VAT for Dropshippers for more information on this point.
- You are based in the EU and your total sales looking back 12 calendar months is less than £70,000
Does it matter who is the importer on record?
If you are a non-UK business there are two scenarios for who is the importer on record, either:
- The customer - in which case goods are likely to be held up at HMRC Customs and the customer must pay the import VAT and any duties that apply to receive their goods
- Your business or logistic / fulfilment provider - in which case goods ship directly to the customer with import VAT and duties paid (which you / logistics company pays)
In neither scenario does it mean you have to register for VAT.
How do I register and submit returns?
Get in touch with us using the Instant Quote form and select the VAT service only and the VAT registration. VAT registrations are typically turned around by HMRC in 7 working days.
We'll walk you through which of the Standard and Flat Rate VAT schemes are most appropriate for you and will handle your quarterly submissions for you. We grab sales data directly from your seller platform(s) so you don't have to lift a finger. You upload any invoices bearing UK VAT on them to our online platform, and we reclaim this VAT as part of your return.