Do Non-UK Businesses Need to Register for VAT in the UK?

If you’re running a business outside the UK but selling to customers in the UK, VAT can often feel like a grey area. Many overseas companies assume that because they aren’t based in Britain, they don’t need to worry about UK tax rules. Unfortunately, that isn’t the case. HMRC takes a strict approach when it comes to identifying non-UK businesses that should be registered for VAT but have not done so. The good news? The rules are relatively straightforward once you understand how VAT itself works. In this guide, we’ll explain what VAT is, when non-UK companies are required to register, and what to expect once you’re enrolled.

What is VAT in the UK?

VAT (Value Added Tax) is the UK’s sales tax. It is levied on most goods and services in the country. It functions as a consumption tax: while the end consumer bears the cost, businesses are responsible for collecting and remitting it to HMRC..

There is a standard VAT rate of 20%, but there are also reduced rates. Some goods and services are charged at 5%, such as children’s car seats and home energy, while others, including most food, books, and children’s clothing, are zero-rated. Some services, including medical care or financial services, are fully exempt.

VAT will be included in your pricing structure if you supply goods or services in the UK. You add it to the bill for your customers, you subtract any VAT that you’ve been charged on business expenses and send the difference between these two figures to HMRC. This system ensures that the tax burden is passed through the supply chain, with businesses acting as the collectors on behalf of the government.

Do Non-UK Businesses Need to Register?

This is the ultimate question, and the answer can be a shock for many businesses: yes, most non-UK companies do have to register for VAT if they’re selling to customers in the UK. Unlike UK-based businesses, which only need to register once their taxable turnover exceeds £90,000, overseas businesses do not benefit from a threshold. The rule is clear: as soon as you make a single taxable sale in the UK, VAT registration may be required.

That said, exactly what you need to do will vary based on what you’re selling and whom you’re selling to:

• Goods vs. services: If you sell physical goods into the UK, VAT registration is typically mandatory upon making your first sale. When it comes to services, though, the difference depends on whether your customer is a business or a consumer.
• B2B vs B2C: For business-to-business (B2B) sales, you might not need to charge the VAT directly. In lots of cases, the reverse charge mechanism operates here, so it falls on the UK customer. However, business-to-consumer (B2C) sales will nearly always require a VAT registration as the end consumer has no way of self-charging it.
• Distance selling and digital services: These are classic trip areas for foreign businesses. For example, if you sell digital products (such as apps, online courses or software subscriptions) to UK customers, you’ll normally need to register for UK VAT immediately. The same also applies to e-commerce businesses shipping goods into the UK, any thresholds that usually operate within the EU or domestically will not apply because you are a non-UK seller.

In short, if you’re supplying anything taxable to UK consumers, VAT registration is almost always necessary. HMRC lays out the details clearly on its VAT registration guidance page.

How to Apply for UK VAT Registration

Most registration of VAT can be done online and if you know what you need, the process is not that complicated. You’ll need to submit:

• Details about your business structure and trading activities
• Information on the goods or services you’re selling
• Proof of your business address
• Identity documents for directors or owners

Once submitted, HMRC typically takes a couple of weeks to process the application, although this can take longer if additional checks are required. You will then receive a VAT registration certificate, which confirms your VAT number, the effective date of registration, and the deadlines for your first return and payment.

It is also important to note that VAT compliance in the UK is fully digital under the rules of Making Tax Digital (MTD). This includes the requirement for VAT returns to be submitted through MTD-compatible software. Often, if you are not operating in the UK, then there will be additional complications.

After Registration: What’s Required?

Obtaining a VAT number is only the first step. Once you are registered, there are ongoing obligations that must be met to remain compliant:

• VAT returns: Taxpayers that are companies, partnerships or that have complex operations usually must submit returns every quarter, but some only need to do so once a year. The return summarises the VAT you’ve charged on sales and the VAT you’ve paid on expenses.
• Bookkeeping: HMRC requires detailed records of all sales and purchases, including invoices, receipts, and import/export paperwork. These must be retained for at least six years.
• Invoicing: VAT invoices must include specific details such as your VAT number, the rate of VAT applied, and the total VAT charged.
• Making Tax Digital compliance: As previously mentioned, you need to send your digital VAT returns via HMRC-accredited software.
• Payments: VAT owed must be paid by the deadline stated on your return. Late payments can quickly lead to penalties and interest charges.

And although this might seem like a lot, once you’ve got the process up and running it becomes part of your normal business rhythm.

Risks of Non-Compliance

Failing to register for VAT when required can lead to serious consequences. HMRC takes non-compliance seriously, and businesses that overlook their obligations face a number of risks:

• Financial penalties: HMRC may fine you, charge interest from the date they think you should have registered and ask for backdated VAT. This can add up quickly.
• Reputational damage: Non-compliance can harm your credibility with UK customers, partners, and suppliers, making it more difficult to build long-term business relationships.
• Enforcement action: In the most serious cases, HMRC has the power to pursue legal action, freeze assets or stop you trading in the UK market.

Taking the right steps from the outset is the best way to avoid these risks. Early registration and compliance not only help you meet legal requirements but also protect your business from unnecessary financial and operational disruption.

Staying Compliant as a Non-UK Business

For foreign businesses not based in the UK, VAT registration in the UK is not something that can be ignored. If you are selling goods or services to UK customers, registration may be required from your very first sale. Once registered, compliance becomes a matter of maintaining accurate records, filing returns on time, and using HMRC’s digital systems correctly.

At Braant, we support non-UK companies throughout this process. We can manage the VAT registration on your behalf and provide ongoing compliance services, allowing you to focus on running your business while we ensure you remain compliant with UK tax rules.