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The UK comes under the EU VAT rules, and is part of the European Union single market economy. VAT Directives are issued by the EU which lay out the principles of the VAT regime to be adopted by the member states, including the UK. These Directives take precedence over the local legislation.
Click here if you would like free guidance on UK VAT registration and compliance.
UK VAT Law
The United Kingdom introduced VAT in 1973. It is administered by HM Revenue & Customs (HMRC).
UK VAT Registration
Foreign companies may register for VAT in the UK without the need to form a local company – this is known as non-resident VAT trading. In the UK there is a VAT registration threshold which applies to resident traders only of £73,000 (approx. €82k). It is also possible to apply to register voluntarily below this threshold. The threshold for non-residents is zero, unless the non-resident is distance selling to private consumers from another EU state, in which case it is £70,000.
EU and Non-EU companies are permitted to register for VAT in the UK without the need to appoint a local fiscal representative.
There are strict rules on the situations where a registration is permitted. Common scenarios which require a UK VAT registration include:
- Importing goods into the EU via the UK;
- Buying and selling goods within the UK;
- Holding goods in a warehouse in the UK as stock;
- Selling goods from the UK to other EU countries;
- Acquiring goods from other EU countries into the UK; and
- Distance selling to private individuals in the UK from another EU country, e.g. internet retailing.
Registering for UK VAT generally takes around 4-6 weeks, although this can vary.
UK VAT Compliance
There are detailed rules controlling the recording and processing of UK transactions. These include guidelines on:
- UK invoice requirements;
- Foreign currency invoicing and reporting;
- Correcting errors in previous returns; and
- What records must be kept.
UK VAT Rates
The standard VAT rate in the UK is 20% since 4th January 2011 (17.5% prior to this date). There are reduced rates of 5% for domestic heating fuel, children’s car seats and other, and 0% for food, books, children’s clothing and other goods and services.
There are many variations to the rates above, including exempt supplies. Please contact us to learn more:
enquiries@tmf-vat.com
UK VAT Returns
Companies with a UK VAT number must submit periodic returns detailing all taxable supplies (sales) and inputs (costs). Returns are submitted either monthly or quarterly in the UK – the rules and application are mixed. VAT returns in the UK are due one calendar month from the end of the reporting period.
Returns can be filed electronically through the HMRC Online Services system – this is currently voluntary but will be compulsory from 2012. Companies who choose to file VAT returns electronically are given a 7 day extension to the filing and payment deadline.
uk Intrastat and EC Sales Lists
In addition to VAT returns in the UK, companies may be required to submit additional statistical information. The UK Intrastat system, (or supplementary statistical declaration), requires a monthly return listing all movement of goods between the UK and other EU-member states. There are annual thresholds for these filings.
The EC Sales List (ECSL) return contains information on the VAT numbers of EU customers and the values of sales in the period to them, and must be filed quarterly or monthly, depending on turnover.
Click here to read more about Intrastat and EC Sales Lists
UK VAT Refunds
If a foreign company is not making taxable supplies in the UK, but is incurring UK VAT on local goods or services, then the VAT may recovered through a VAT reclaim.
For more details, click here to read about our VAT Recovery service
To talk about our UK VAT services, enquiries should be made to TMF’s Brighton, UK office, which co-ordinates TMF's European VAT services. TMF has three offices in the UK.
enquiries@tmf-vat.com
+44 (0)870 067 8881
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European Vat 