UK VAT registration

Many e-commerce entities sell their services outside the European Union, such as to the UK. However, after Brexit, i.e. the UK’s exit from the EU, the rules for selling to the UK and the financial and accounting settlements associated with it, including VAT settlement, have become more complicated. What is the process of registering for UK VAT, and who does it apply to?

The UK is still a very popular destination for e-commerce sellers. However, it is important to note that if you sell goods and services in the UK, you may need to register for VAT. On January 1, 2021, the new UK VAT regulations came into force, thus the UK is not subject to EU VAT settlement regulations – for example, you can’t use the EU VAT OSS procedure under the VAT e-commerce package, which from July 1, 2021 allows you to collect and remit VAT on sales in all EU countries in one country.

In the case of sales to the UK, we are talking about the export of goods, which are taxed at a 0% rate in the European Union, but are also subject to UK VAT registration, rates and settlement requirements.

When is there an obligation to register for UK VAT?

In order for registration for VAT in the UK, for non-UK e-commerce entities, to be mandatory, one of the specific conditions must occur:

• the entity sells goods and services to UK buyers, and the total value of these sales during the year will exceed £70,000;
• the entity stores its goods in the UK and sends them to its buyers from different countries;
• the entity imports goods into Europe through the UK.

In addition to mandatory registration for UK VAT, the entity can, of course, also voluntarily register for UK VAT. However, it must then also comply with all the obligations of a VAT payer, including issuing invoices with UK VAT, settling at the applicable rates and filing the relevant returns.

UK VAT registration process. How to register for UK VAT?

For both mandatory and voluntary registration for UK VAT, the easiest way is to do it online at HMRC – Her Majesty Revenue & Customs, the UK equivalent of the tax office. The first step is to create an account and apply for the VAT A1 form “Application for Registration – Distance Selling” via the website.

The application can also be submitted on paper. The address of the HM Revenue & Customs UK (HMRC) is: 100 Parliament Street, London, SW1A 2BQ. The UK Treasury can be contacted at +44 135 535 9022.

To register for UK VAT, you will need to prepare the necessary documents, including:

• registration application;
• identity document;
• social security (NI) number;
• UTR, or unique taxpayer reference number;
• company registration certificate;
• proof of bank account;
• possibly contracts with carriers, invoices and agreements with marketplace platforms.

The necessary documents must be submitted 30 days before the first transaction to be settled at UK rates.

Obligations of a VAT payer in the UK

Successful registration for UK VAT ends with the assignment of a UK VAT number. It consists of 9 digits and can be preceded by the prefix GB. The e-commerce entity must include UK VAT on invoices and charge the appropriate VAT rate. Among the other responsibilities of a UK VAT payer is that it must settle VAT in the UK – pay VAT to HMRC and send VAT returns. The time to submit the returns is one month and seven days after the accounting period, which is usually three months and begins after successful registration.

You must also keep VAT records, which means keeping all invoices and receipts for at least six years. As of April 1, 2019, all companies that are UK VAT payers must comply with MTD, or Making Tax Digital, regulations. The e-commerce entity must store all invoices and receipts digitally, and send VAT returns electronically through an MTD-compliant program.

UK VAT – rates

There are three VAT rates in the UK:

• basic 20%;
• 0% – applies to products and services such as printed books, magazines, takeaway food, children’s clothing and footwear, new-build construction work, domestic waste collection;
• 5% – this includes electricity supplies, medical equipment for the disabled, LPG and home heating oil, among others.

Excluded from UK VAT taxation are insurance, financial, postal, educational, medical, hospital and recreational services.

Registering for VAT in the UK – common problems

Registering for UK VAT is not an easy process. Difficulties in registering for UK VAT are primarily related to providing the appropriate documentation. It is very common for HMRC to ask for the completion of documents that are difficult to obtain for e-commerce entities in Poland, such as contracts with carriers or documents regarding the establishment of cooperation with an online marketplace platform (OMP).

Another problem with registering for UK VAT is the time HMRC sets to complete the documentation. The e-commerce entity most often has to provide the missing documents by mail, which makes the whole process longer and more difficult. Sometimes the e-commerce entity, despite shipping the missing documents, is told that the process has been canceled, in which case the process must be started from the beginning.

Difficulties can also be provided by communication with HMRC officials if possible doubts arise during the process of registering for UK VAT.

UK VAT registration – use a professional accounting firm

Due to the problems outlined above, registering for UK VAT and also subsequently accounting for VAT in the UK can be challenging for many entities. Often, the HRMC will send back the application and ask for additional information. To avoid problems, it is advisable to use a professional accounting firm for the e-commerce industry to help with both UK VAT registration, proper accounting, filing of returns, and record keeping and archiving.

amavat® offers UK VAT registration and settlement services under VAT Compliance. We will securely and efficiently register your e-commerce entity for UK VAT, and then settle the VAT and file the returns. The VAT Compliance service is an essential and very helpful tool for all e-commerce entities.

You can find more information about the VAT Compliance service for e-commerce sellers selling to the UK and settling UK VAT here: https://amavat.eu/vat-compliance-e-commerce/.

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

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