Value Added Tax (VAT) Registration

Value Added Tax (VAT) Registration banner

Registration in the UK

You must register in the following circumstances:-

  1. At the end of the month if the value of taxable supplies in the past twelve months has exceeded the annual threshold.
  2. At any time if there are reasonable grounds for believing that the value of taxable supplies in the next 30 days will exceed the annual threshold.

Please note that taxable supplies exclude goods and services you supply where the place of supply is another country rather than the UK.

Please remember that HMRC can levy automatic penalties for failure to register and for the late submission of Returns. Will you please remember to keep photocopies of your quarterly VAT returns.

If your turnover does not exceed the registration limits it may still be to your advantage to register voluntarily if the majority of your clients are themselves registered for VAT as you will be repaid all your input tax.

Registration in other EU country

From 1st January 2010:-

  • The place of supply for cross-border services to business customers (B2B services) is now (under the general rule) in the country of the customer. When these supplies are made within the E.U. the customer will account for VAT under the reverse charge mechanism.
  • Where your supply of services are not made to businesses (B2B supplies) but are made to consumers (B2C supplies) your place of supply is the place where you belong for the purposes of making your supply.

However, there are special rules for the place of supply for:-

(a) Hiring out a means of transport.
(b) Land and property services.
(c) Physical performances.
(d) Intermediaries.
(e) Works carried out on goods.
(f) Transport.
(g) Charters.

If you are one of the above sectors your place of supply may be where the service was performed.

  • The time at which a customer accounts for VAT under the reverse charge mechanism is also changing.
  • There is a new requirement to file EC Sales Lists (ESLs) for supplies of services that are taxable in the customer's country. These must be filed every calendar quarter, within 14 days for paper and 21 days for online.
  • The same deadlines will apply for ESLs for goods. ESLs for goods must be filed monthly if the value of the goods exceeds £70K (VAT exclusive) in the current or any of the previous four quarters.
  • A new online service will be introduced for reclaiming VAT incurred in other E.U. states instead of the current paper-based claims. You will need first of all, to register and enrol for VAT online services at http://online.hmrc.gov.uk/registration.

If your overseas E.U. service is (B2C service) and your place of supply is 'where performed' you may be required to register for VAT in that E.U. country. If you have no business establishment in that E.U. country where you are performing it may be necessary to appoint a fiscal representative to register for VAT on your behalf. This could be a costly process as the representative would be jointly and severally liable for any VAT debts and would probably require an advanced payment or bond from you to cover any such liability. It is therefore advantageous to try to avoid registration wherever possible.

It is possible in most E.U. countries to arrange for the obligation to account for VAT to be shifted to the recipient of your services. In most cases this would be the local promoter who would already be registered for VAT in his own country. If the tax shift is allowable in that country, the promoter can declare VAT on the services that you provide and overcome the problem of you having to register for VAT in that country.

Click here to email Tim Dauncey for further information or if you would like to ask him a question.

This material provides only an overview of the regulations in force and no action should be taken without consulting the detailed legislation or seeking professional advice. Therefore no responsibility for loss occasioned by any person acting or refraining from action as a result of the material can be accepted by the authors or the firm.