Executive Summary
Overseas companies selling goods or services to UK customers may need to register for UK Value Added Tax (VAT). However, the rules differ depending on where the business is established, what it sells, where the goods are located and how its services are supplied.
Unlike UK-established businesses, overseas businesses generally do not benefit from the standard VAT registration threshold when they make taxable supplies in the UK. A non-established taxable person (NETP) may need to register from the first taxable supply, regardless of turnover.
However, not every transaction with a UK customer creates a UK VAT registration requirement. For example, certain business-to-business services may fall under the reverse charge mechanism, meaning the UK customer accounts for VAT instead.
This guide explains when overseas companies need to register, how the rules apply to goods and services, and what businesses should consider before entering the UK market.
1. Do Overseas Companies Need to Register for UK VAT?
The answer depends on the company’s establishment, the nature of its supplies and where those supplies are treated as taking place for VAT purposes.
A foreign company may need to register even if it has no UK office, employees or subsidiary.
For VAT purposes, a business established outside the UK that makes taxable supplies in the UK will generally need to register regardless of its turnover, subject to specific exceptions.
The £90,000 VAT threshold
The standard UK VAT registration threshold is £90,000 of taxable turnover for businesses established in the UK.
However, the £90,000 threshold generally does not apply to non-established taxable persons making taxable supplies in the UK.
This means that an overseas company cannot assume it can trade below the UK threshold without registering.
For example, an Israeli company selling taxable goods directly to UK customers may need to register for UK VAT from its first relevant taxable supply, even if its UK sales are relatively small.
The analysis must still establish whether the supply takes place in the UK and whether a specific exception applies.
Official guidance is available in HMRC’s VAT registration guidance and VAT Notice 700/1: Who should register for VAT.
2. When Does an Overseas Company Need to Register?
The most important consideration is whether the overseas business makes taxable supplies in the UK.
The following table summarises common scenarios.
| Business activity | UK VAT registration position |
| Selling taxable goods located in the UK to UK customers | Generally required for an overseas seller, subject to specific rules such as online marketplace arrangements. |
| Importing goods into the UK and selling them directly to UK customers | Generally required where the overseas seller makes taxable UK supplies. |
| Providing services to UK VAT-registered businesses | The reverse charge may apply, potentially removing the need to register if all relevant supplies are covered. |
| Providing services to UK consumers | Depends on the type of service and place-of-supply rules; registration may be required. |
| Selling through an online marketplace | Special rules determine whether the seller or marketplace accounts for VAT. |
| Supplying only VAT-exempt or out-of-scope goods and services | Registration may not be required, depending on the circumstances. |
| Operating a UK subsidiary | The subsidiary must assess its own VAT registration obligations separately from its foreign parent. |
The company should review each revenue stream separately rather than assuming that all sales to UK customers have the same VAT treatment.
3. Does the Type of Supply Matter?
Yes. The VAT treatment of goods and services can differ significantly.
Selling goods to UK customers
Overseas companies selling physical goods should establish where the goods are located at the time of sale and who is responsible for importing them.
For example, an overseas business may:
- Import stock into the UK and sell it directly to customers.
- Store inventory in a UK warehouse.
- Ship goods directly from overseas to UK customers.
- Sell goods through an online marketplace.
Each arrangement can have different VAT and import obligations.
If an overseas business stores goods in the UK and sells them directly to customers, it will generally need to register for UK VAT when making taxable supplies, subject to specific exceptions.
Import VAT and customs obligations should also be considered separately.
Providing services to UK businesses
Services require a different analysis.
For many general business-to-business services, the place of supply is where the business customer belongs. When an overseas supplier provides such services to a UK VAT-registered business, the reverse charge may apply.
Under this mechanism, the UK customer accounts for VAT on its VAT Return rather than the overseas supplier charging UK VAT.
However, this treatment is not universal. Special rules apply to certain services, including some property-related, event-related and other specified supplies.
The supplier must identify the correct place of supply before deciding whether UK VAT registration is necessary.
Providing services to UK consumers
Business-to-consumer services may be subject to different place-of-supply rules.
Depending on the service, UK VAT may be due even when the supplier has no physical presence in the UK.
Digital services, consultancy, electronically supplied services and services connected with UK property should therefore be reviewed carefully.
The company should not assume that all services supplied remotely from overseas are outside the scope of UK VAT.
4. What Are the VAT Rules for Online Sellers?
Overseas businesses selling through online platforms must determine who is responsible for accounting for VAT.
The answer depends on the platform’s role, where the goods are located and the nature of the customer.
Goods stored in the UK
If an overseas seller stores goods in the UK and sells them through an online marketplace, the marketplace may be responsible for accounting for VAT on certain sales to UK customers.
However, the overseas seller may still have VAT obligations, particularly in relation to imports, sales to VAT-registered businesses and other transactions.
The fact that a marketplace collects VAT does not automatically remove every VAT obligation from the seller.
Goods shipped from overseas
Special rules apply to goods sold to UK customers when the goods are outside the UK at the point of sale.
For certain consignments valued at £135 or less, an online marketplace may be responsible for collecting and accounting for VAT.
For higher-value consignments, normal import VAT and customs rules generally apply.
The treatment can also differ between sales to consumers and sales to VAT-registered businesses.
Why does this matter?
Businesses selling through platforms should reconcile their sales records with the VAT accounted for by the marketplace.
They should also establish whether they need their own UK VAT registration to account for other supplies or recover eligible input VAT.
HMRC provides detailed guidance on VAT for overseas goods sold through online marketplaces.
5. How Does an Overseas Company Register for UK VAT?
When registration is required, the company should prepare its application using the process applicable to overseas businesses.
Step 1: Confirm the registration requirement
Identify the supplies made to UK customers and establish their VAT treatment.
The review should cover:
- The type of goods or services supplied.
- Where the goods are located.
- The place of supply of services.
- Whether the reverse charge applies.
- Whether an online marketplace accounts for VAT.
- Whether any registration exception is available.
Step 2: Prepare the company information
The application generally requires details about the overseas business, its legal identity, activities and expected UK supplies.
Supporting documents may include incorporation documents, evidence of business activities and other information requested by HMRC.
The precise requirements depend on the business and the registration route.
Step 3: Submit the application to HMRC
Overseas businesses should follow HMRC’s applicable registration process. Depending on the circumstances, they may need to use a VAT registration form rather than the standard online route available to UK-established businesses.
The company should provide accurate information and retain a copy of its application and supporting documents.
Step 4: Consider a VAT representative
Some overseas businesses may need to appoint a UK VAT representative, depending on where they are established and the applicable rules.
A VAT representative can be jointly and severally liable for certain VAT obligations. The company should therefore understand the responsibilities involved before making an appointment.
Step 5: Review the effective registration date
The effective date of registration is important because it determines when the company must account for VAT.
Overseas businesses should not assume that VAT obligations begin only when HMRC issues the VAT number. If registration was required earlier, the company may need to address VAT liabilities for the relevant period.
Official guidance is available through HMRC’s VAT registration service.
6. Can an Overseas Company Reclaim UK VAT?
A VAT-registered overseas company may be able to recover VAT incurred on eligible business purchases, subject to the normal input tax recovery rules.
Examples may include VAT incurred on:
- UK professional services.
- Eligible business expenses.
- Goods purchased for taxable business activities.
- Certain costs associated with UK operations.
However, VAT recovery is not automatic. The company must hold appropriate evidence and ensure that the expenditure relates to activities for which input VAT recovery is permitted.
Certain costs may be blocked or restricted, and VAT linked to exempt activities may not be recoverable in full.
What if the company is not VAT-registered?
An overseas business should not assume that it can recover UK VAT simply because it has incurred the expense.
Depending on its circumstances, it may need to register for UK VAT or assess whether a separate overseas VAT refund procedure is available.
The correct route depends on the company’s establishment, activities and eligibility.
7. What Are the Ongoing VAT Compliance Obligations?
VAT registration creates ongoing responsibilities that overseas companies must manage.
VAT Returns
Registered businesses generally submit VAT Returns quarterly, although HMRC may approve a different reporting frequency.
Returns usually need to be submitted, and any VAT due paid, within one month and seven days after the end of the VAT period.
The applicable deadline should be checked against the company’s VAT account and reporting arrangements.
VAT invoices
Where required, the company must issue VAT invoices containing the appropriate information.
Invoices should reflect the correct VAT treatment, including whether UK VAT is charged, a zero rate applies or the reverse charge is relevant.
Incorrect invoicing can lead to customer disputes and VAT reporting errors.
Digital records and Making Tax Digital
VAT-registered businesses generally need to comply with Making Tax Digital for VAT requirements.
This includes keeping digital VAT records and submitting VAT Returns using compatible software, subject to applicable exemptions.
Overseas companies should establish suitable accounting systems before they begin filing returns.
Record retention
The company should retain invoices, accounting records, import documents and other evidence supporting its VAT treatment.
These records are important when preparing returns, recovering input VAT and responding to HMRC enquiries.
8. What Happens If an Overseas Company Fails to Register?
Failure to register when required can create significant financial and administrative problems.
Potential consequences include:
- VAT liabilities for earlier periods.
- Interest on unpaid VAT.
- Penalties for late registration or inaccurate reporting, where applicable.
- Additional work to reconstruct sales and purchase records.
- Disputes over whether VAT can be recovered from customers.
- Delays in resolving the company’s UK tax position.
A particular risk arises when a company has agreed a fixed price with a UK customer but has not considered whether VAT should have been charged.
If the contract does not allow the company to recover additional VAT from the customer, the company may have to fund the liability from the agreed sales proceeds.
Businesses should therefore assess VAT before entering contracts, importing stock or launching UK sales.
9. Practical Checklist for Overseas Companies
Before starting UK sales, finance teams should review the following:
- Identify all goods and services supplied to UK customers.
- Determine the place of supply for each category.
- Confirm whether the company is a non-established taxable person.
- Check whether UK VAT registration is required from the first taxable supply.
- Assess whether the reverse charge applies to business-to-business services.
- Review the treatment of goods imported into or stored in the UK.
- Check marketplace VAT arrangements.
- Consider whether a VAT representative is required.
- Establish the correct registration process and effective date.
- Set up appropriate invoicing and accounting systems.
- Review input VAT recovery eligibility.
- Create a calendar for VAT Returns and payment deadlines.
- Retain supporting documentation for transactions and VAT calculations.
This review should be repeated whenever the business changes its sales model, introduces new services or begins storing goods in the UK.
Frequently Asked Questions
1. Does a foreign company need to register for UK VAT?
It generally needs to register if it makes taxable supplies in the UK as a non-established taxable person, subject to specific exceptions. The standard UK VAT registration threshold generally does not apply to these businesses.
2. Does the £90,000 VAT threshold apply to overseas companies?
Generally, no. Overseas businesses making taxable supplies in the UK may need to register regardless of turnover. The precise position depends on the place of supply and any applicable exceptions.
3. Does a foreign company need a UK office to register for VAT?
No. A company can have UK VAT registration obligations without having a UK office, branch or subsidiary.
4. Can an overseas company provide services to UK businesses without registering for VAT?
Potentially. If the services fall under the general business-to-business place-of-supply rule and the UK customer accounts for VAT under the reverse charge, the overseas supplier may not need to register solely for those supplies. Special rules and other activities must be considered.
5. Does selling through Amazon or another online marketplace remove the need to register?
Not necessarily. The marketplace may account for VAT on certain sales, but the seller may still have registration obligations for other transactions, imports or sales to business customers.
6. Can a foreign company reclaim UK VAT?
A company may recover eligible input VAT if it meets the applicable requirements. The recovery route depends on whether the company is VAT-registered and its particular circumstances.
7. How often must an overseas company submit UK VAT Returns?
Registered businesses generally submit VAT Returns quarterly, although other reporting arrangements may apply. Returns and payments are usually due one month and seven days after the end of the VAT period.
Conclusion
UK VAT registration is an important consideration for overseas companies planning to sell goods or services to UK customers.
The key issue is not simply how much the company sells, but whether its activities create taxable supplies in the UK and which rules apply to those transactions.
Overseas businesses should review their place-of-supply position, import arrangements, marketplace sales and reverse charge exposure before entering the UK market. They should also establish appropriate invoicing, accounting and VAT reporting processes from the outset.
A proactive review can help businesses avoid unexpected liabilities, recover eligible VAT and manage their UK compliance obligations effectively.
To discuss your UK operations, book a meeting through our online calendar or contact us by email for a confidential consultation: David.levy@fkgb.co.uk
