Issues with VAT registration in the UK

VAT registration in the UK – challenges. E-commerce entities are increasingly eager and more frequent in selling their services to the United Kingdom, as it is a rapidly growing e-commerce market. However, in order to sell their products in the British market, VAT registration in the UK is necessary. Meanwhile, after Brexit, this is not such an easy task! What are the most common problems that need to be addressed when registering for VAT in the UK and how to deal with them? We provide some guidance.

In the case of selling goods and services in the UK, VAT registration may be necessary – since January 1, 2021, after the implementation of the provisions resulting from Brexit, simplified EU VAT settlement rules (e.g., the VAT OSS procedure, the VAT e-commerce package) do not apply, and the export of goods subject to VAT in the UK is applicable.

However, before an e-commerce entity can account for UK VAT and start operating in the British market, it may encounter problems related to VAT registration in the UK. These problems have intensified since the United Kingdom left the European Union.

VAT registration in the UK – common issues

Registering for VAT in the UK is not an easy process. The biggest difficulties in registering for VAT in the UK are mainly related to:

• providing the appropriate documentation;
• the allotted time for completing the documentation;
• communication with HMRC officials – Her Majesty Revenue & Customs, the British equivalent of the tax office.

VAT UK – registration. Documentation problem

Often, HMRC (https://www.gov.uk/government/organisations/hm-revenue-customs) requests completion of documents that may be difficult to obtain for e-commerce entities in Poland. These include contracts with carriers and documents regarding cooperation with an online marketplace platform (OMP). Additionally, after Brexit, HMRC requests a significantly larger number of documents for VAT registration in the UK. Essential documents for VAT registration in the UK:

• registration application;
• identity document;
• National Insurance number (NI);
• UTR, i.e., the unique taxpayer reference number;
• company registration certificate;
• confirmation of having a bank account;
• potentially contracts with carriers, invoices, and agreements with marketplace platforms.

Documents must be submitted 30 days before the first transaction, settled according to British VAT rates.

VAT registration in the UK. Short time to complete documentation

Another difficulty in registering for VAT in the UK is the time HMRC sets for completing the documentation. E-commerce entities most often have to provide missing documents by mail, which prolongs and complicates the entire process. It happens that despite sending missing documents, the e-commerce entity receives information that the process has been canceled because the letter or parcel did not reach HMRC. In such a situation, the entire process must be restarted. An appeal can also be lodged, but it should also be sent by mail, which does not facilitate its processing.

VAT UK registration – communication problem The last among the most common problems with VAT registration in the UK is communication with HMRC officials. An e-commerce entity and future VAT taxpayer in the UK create an account on the HMRC website (https://www.gov.uk/log-in-register-hmrc-online-services). In case of any doubts, there are four contact options available:
• traditional mail;
• email;
• contact form on the HMRC website – https://www.gov.uk/contact-hmrc;
• hotline.

The most common form of contact with HMRC is traditional mail. It is through the postal route that information such as notifications of data changes, changes in the legal form of the company, appeals against imposed fines, or responses to summons should be sent. Email communication, in the case of VAT registration in the UK, is mainly used by HMRC for verification purposes. However, HMRC often does not respond to emails regarding, for example, uncertainties in the registration process or doubts regarding UK VAT.

The contact form is available on the HMRC website (https://www.gov.uk/contact-hmrc). Unfortunately, the system operates in such a way that after receiving a response, we cannot reply to it. In case of additional questions, you must fill out the contact form again, but then it is treated as a new inquiry and may be handled by a different HMRC employee who is not familiar with our case. There is also an option to contact the dedicated HMRC hotline for entities outside the UK (+44 135 535 9022). Contacting them is cumbersome because you have to go through a long process of selecting the issue, listen to responses to scripts, and only then possibly have a conversation with a consultant.

The obligation to register for VAT in the UK. When does it occur?

E-commerce entities outside the UK may encounter the above difficulties in VAT registration in the UK if they:

• sell goods and services to UK customers, and the total value of this sales within a year exceeds £70,000;
• store their goods in the United Kingdom and send them to recipients in other countries;
• import goods into Europe through the territory of the United Kingdom;
• or voluntarily want to settle UK VAT.

How to register for VAT in the UK? The process of registering for VAT in the United Kingdom

The easiest way to register for VAT UK is online with HMRC – you must submit an application on VAT form A1 “Application for Registration – Distance Selling” through the website: https://www.gov.uk/sign-in-vat-account. You can also submit the application in paper form. The address of Her Majesty’s Revenue and Customs (HMRC) is: 100 Parliament Street, London, SW1A 2BQ.

Successful registration for VAT in the UK results in the allocation of a British VAT number. It consists of 9 digits and may be preceded by the prefix GB. The e-commerce entity must include British VAT on invoices, apply the appropriate VAT rate, pay VAT to HMRC, submit VAT returns within a specified period, and keep digital VAT records.

UK VAT rates

In the United Kingdom, three VAT rates apply:

• standard rate of 20%;
• 5% – including supplies of electricity, medical equipment for disabled persons, LPG and heating oil for domestic use;
• 0% – applies to products and services such as printed books, magazines, takeaway food, children’s clothing and footwear, construction work in new buildings, and domestic waste collection.

VAT in the UK does not apply to: insurance, financial, postal, educational, medical, hospital, and recreational services.

VAT registration in the UK – use a professional accounting office

As outlined above, registering for VAT in the UK can pose many problems for e-commerce entities. Therefore, it is worth using an accounting office at this stage, which will help and guide the e-commerce entity both in the process of VAT registration in the UK and in its subsequent settlement. One such office is amavat®! amavat® offers services related to VAT registration and settlement in the UK as part of VAT Compliance. We will safely and correctly register your e-commerce entity for VAT in the UK and then settle VAT and submit returns. More information about VAT Compliance service for e-commerce sellers selling goods to the United Kingdom and settling UK VAT here: https://amavat.eu/vat-compliance-e-commerce/.

If you have any questions or need additional information, feel free to contact our team of experts, ready to provide assistance and support: Contact us – amavat®.