13 February 2012
HM Revenue & Customs (HMRC) has announced important changes for overseas businesses selling goods or services in the UK. Any business which is not established in the UK, which makes UK ‘taxable’ sales of goods or services will have to register and account for UK VAT, regardless of the value of those sales. The new rules are due to take effect from 1 December 2012. This is a significant change to the rules, which currently allow non-established businesses to sell goods and/or services with a value of up to £73,000, before having to register for UK VAT. HMRC say that the change is necessary to bring the UK in line with European Union (EU) VAT law.
For example, a non-EU business supplying software downloads over the internet to UK private individuals currently does not have to register for UK VAT if the value of UK sales remains below £73,000 in any 12 month period. With effect from 1 December 2012, the business will be required to register and account for VAT on all UK sales, regardless of the value.
Businesses which are affected by this change should review their VAT position as soon as possible. It should be noted that penalties may apply for failing to register for VAT at the correct time.
Our specialist VAT team advises many overseas businesses on their UK VAT obligations. If you would like to discuss how the new rules will affect your business, please contact Robert Facer.