New VAT rules for non UK established businesses

HMRC have made changes to VAT notice 700/1 'Should I be registered for VAT?' They have added guidance on registering for VAT online and have also set out new rules for businesses not established in the UK.

From 1st December 2012 the VAT registration threshold will be removed for businesses with no UK establishment. Currently these businesses do not need to register for UK VAT where their UK sales are below the VAT registration threshold (currently £77,000). After 1st December 2012 the threshold will be removed for these businesses, so if they make any sales liable to VAT in the UK then they will be required to register.


HMRC have updated section 9 of VAT Notice 700/1 to reflect these changes. The notice describes these businesses as Non-established taxable persons (NETPs) and has the following definition:

An NETP is any person who is not normally resident in the UK, does not have a UK establishment and, in the case of a company, is not incorporated here.

These changes are likely to affect non UK businesses that sell to UK customers and source the goods also from the UK. They could also impact on services performed by non UK businesses in the UK where the place of supply is where physically performed, or relating to land. Overseas businesses importing or distance selling into the UK are unaffected by these changes as the existing rules are unchanged.

Further information can be found in Notice 700/1. If you have any queries on this please contact us.