Overseas businesses registering for UK VAT

Q: What are the common mistakes?

Waiting for £90,000 of sales. The threshold never applies to a NETP. Assuming a UK company or UK address makes the business established. HMRC looks at where the business is actually managed and whether it has staff and resources in the UK. Using a UK warehouse or forwarding address as the principal place of business. Notice 700/1 says it should not be a third party address. Treating every service as reverse charged. Sales to consumers, UK property services and UK events can require registration. Once registered, a NETP follows the normal invoicing rules in what a valid VAT invoice must show. If HMRC opens a check into your return, tax investigation insurance pays your accountant's fees. Solar Protect cover pays up to £100,000 with no excess; it never pays tax, interest or penalties. Read how our cover works or get a quote.

A business with no establishment in the UK that makes taxable supplies here is a non established taxable person (NETP), and it must register for UK VAT from its first taxable supply, whatever the value. The £90,000 threshold belongs to the rules for UK established businesses and does not apply. Registration is made through HMRC’s online VAT registration service, either directly or through an agent or a UK VAT representative.

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What is a non established taxable person?

A NETP is a person who is liable to register under Schedule 1A to the VAT Act 1994. HMRC’s VAT Registration Manual (VATREG37150) explains that paragraph 1 of Schedule 1A sets three conditions. The person makes taxable supplies in the UK, or intends to in the next 30 days; the supplies are made in the course or furtherance of a business; and the person has no establishment or fixed establishment in the UK.

Establishment is not defined in the legislation and comes from case law. HMRC treats a UK establishment as existing if either:

the place where essential management decisions are made and central administration is carried out is in the UK, or
the business has a permanent physical presence in the UK with the human and technical resources to make or receive taxable supplies.

Several things that look like a UK presence are not enough on their own. VATREG37150 says a company incorporated in the UK would not alone constitute a UK establishment, a UK fulfilment warehouse used only to send and receive goods is unlikely to create one, and a registered, serviced or virtual office address or mail forwarding service will not create one. HMRC also notes that businesses established in the Isle of Man are not treated as NETPs and keep the benefit of the UK registration threshold.

VAT establishment is a separate question from whether an overseas company must register a UK establishment with Companies House, which is covered in our guide to registering an overseas company’s UK establishment.

Why is there no registration threshold for overseas businesses?

The threshold is a feature of Schedule 1, which governs UK established businesses. Schedule 1A, which governs NETPs, does not contain one. VATREG37050 records that Schedule 1A was inserted into the VAT Act when the registration threshold was removed for businesses without a UK establishment, and that before December 2012 NETPs benefited from the UK domestic threshold.

The result is that a NETP must notify HMRC of its liability to register regardless of the value of its taxable supplies. VAT Notice 700/1 puts it plainly: if you are a NETP, the registration threshold for taxable supplies does not apply, so you will have to register if you make taxable supplies of any value in the UK. Schedule 1A also has no equivalent of the “exception from registration” that a UK business can request when it goes over the threshold only temporarily (VATREG37250).

For UK established businesses, the comparison point is our page on the VAT registration threshold, currently £90,000 for 2026 to 2027.

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When must a NETP register, and from what date?

A NETP must register if it makes taxable supplies in the UK or expects to do so in the next 30 days. A taxable supply is a supply of goods or services made in the UK that is not exempt (VAT Act 1994, section 4(2)). Under Notice 700/1, paragraph 9.3, where you are liable to register you must tell HMRC within 30 days.

VATREG37050 says the effective date of registration is the date of the first supply, or the date the expectation of making taxable supplies in the UK first arose. Paragraphs 5(2) and 6(2) of Schedule 1A allow HMRC to register a NETP retrospectively from the day the liability arose. Any VAT due on sales from that date is payable even if the business did not charge it to its customers.

When does an overseas business not need to register?

Being outside the UK does not automatically create a registration requirement. The key question is whether the business makes taxable supplies in the UK that it, rather than someone else, must account for. HMRC guidance (Notice 700/1 paragraph 9.3 and VATREG37200 to VATREG37250) identifies these main cases:

Reverse charge. A business is not entitled or liable to register if all its UK supplies are subject to the reverse charge. Services supplied to UK business customers usually fall under the reverse charge, so the UK customer accounts for the VAT. Supplies to private consumers, services connected with UK property and entertainment in the UK are exceptions.
Only zero rated supplies. Paragraph 13 of Schedule 1A allows a person who makes only zero rated supplies in the UK to apply for exemption from registration. If the nature of the supplies changes, it usually has to tell HMRC within 30 days.
Low value goods through online marketplaces. Goods outside the UK at the point of sale, in a consignment of £135 or less without excise goods, sold to a non business customer through an online marketplace are treated as supplied by the marketplace, not by the overseas seller.
Only exempt supplies. If all your UK sales are exempt, you are unable to register.

Goods sold through an online marketplace that are already in the UK at the point of sale do create a liability, although the overseas seller can request exemption from registration because the deemed supply to the marketplace is zero rated. VATREG37250 notes that it is often better to register anyway so that import VAT can be reclaimed.

How does a NETP register?

Registration is made using HMRC’s online VAT registration service. Notice 700/1, paragraph 9.4, says the NETP will be registered at the address of its principal place of business, which is where orders are received and the day to day running of the business takes place. It must be outside the UK and should not be a third party address such as a mail forwarding or registered office address.

The NETP then chooses how to manage its UK VAT:

Deal with HMRC directly. The NETP is responsible for registering on time, keeping records, filing returns and paying the right amount of VAT.
Appoint an agent. An agent can complete the registration and act for the business, but is not jointly and severally liable for its VAT debts (VATREG37650).
Appoint a VAT representative. Under section 48 of the VAT Act 1994, a representative keeps the VAT records, accounts for VAT and is jointly and severally liable for the NETP’s VAT debts. A principal may have only one representative at a time, and HMRC will not accept an arrangement that seeks to limit the representative’s liability (VATREG37500).

HMRC can direct some NETPs to appoint a UK established representative who is fit and proper, and since 13 October 2016 it can ask a business not established in the UK for security whether or not a direction has been made (VATREG37400). Notice 700/1 lists factors that can make a representative unsuitable, such as director disqualification, deliberate penalties, unmanaged HMRC debts or holding no assets and no insurance.

Repayments are usually paid to a UK bank account. VATREG37360 explains that a NETP without a UK bank account or UK address can ask, after registration, for repayments to be made to an overseas account in the company’s name that can accept sterling, by completing a form in its Government Gateway account.

Can you show how this works in practice?

Illustration only. A company based in Ireland, with no staff or premises in the UK, stores stock in a third party warehouse in England and sells directly to UK consumers through its own website. Its first UK sale is £400 on 10 March.

The warehouse does not give it a UK establishment, so it is a NETP.
The sale is a taxable supply of goods in the UK, so it is liable to register from 10 March, despite the small value.
It must tell HMRC within 30 days, register at its Irish head office address rather than the warehouse, and account for UK VAT on the £400 sale and all later UK sales.

If the same company instead sold consultancy services only to UK VAT registered businesses, those supplies would normally fall under the reverse charge and it would not need to register.

What happens if a NETP fails to register?

Notice 700/1 (paragraph 11.1) says HMRC may register a business without its agreement if it does not register when required. VATREG37350 confirms that NETPs are subject to the normal failure to notify penalty regime, with the penalty linked to the business’s behaviour, reduced for cooperation and disclosure, and potentially not due at all where there is a reasonable excuse. See our guide to failure to notify penalties. Overseas sellers using online marketplaces also face the risk that HMRC notifies the marketplace, which may remove them from its site.

What are the common mistakes?

Waiting for £90,000 of sales. The threshold never applies to a NETP.
Assuming a UK company or UK address makes the business established. HMRC looks at where the business is actually managed and whether it has staff and resources in the UK.
Using a UK warehouse or forwarding address as the principal place of business. Notice 700/1 says it should not be a third party address.
Treating every service as reverse charged. Sales to consumers, UK property services and UK events can require registration.

Once registered, a NETP follows the normal invoicing rules in what a valid VAT invoice must show.

If HMRC opens a check into your return, tax investigation insurance pays your accountant’s fees. Solar Protect cover pays up to £100,000 with no excess; it never pays tax, interest or penalties. Read how our cover works or get a quote.

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Sources

Reviewed by Christine Anderson, Broker, Solar Protect. Last reviewed 8 October 2026. Part of Accountapedia, the Solar Protect guide to UK tax and accounting. This page is general information, not personalised advice.