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If you're a VAT-registered business outside the UK but in another European Union (EU) country and you sell and deliver goods to customers in the UK or the Isle of Man who aren't VAT-registered - and don't have to be registered - then you're 'distance selling'. For example, you might sell goods through the Internet or a through a mail order catalogue. Sales you make to customers who are VAT-registered don't count as distance sales.
Businesses that distance sell into the UK have to register for UK VAT if the value of their distance sales is more than £70,000 in a year. If you distance sell excise goods like alcohol and tobacco then you'll have to register for UK VAT and Excise Duty no matter how much your sales are worth.
This guide will help you understand what you have to do about VAT if you're outside the UK and you make distance sales to UK customers.
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Distance selling occurs when a VAT-registered business in one EU country supplies and delivers goods to a customer in another EU country who isn't registered for VAT. So you are distance selling if all of the following are true:
Customers who aren't VAT-registered might include:
Distance selling only involves goods, not services. And it only takes place when someone registered for VAT in one EU country sells and delivers goods to someone in another EU country who isn't registered - and doesn't have to be registered - for VAT. So if you're outside the EU then any sales you make to the UK aren't distance sales and this guide doesn't apply to you.
The total value of distance sales you make into the UK and the Isle of Man each year determines whether or not you have to register for UK VAT as a distance seller.
If the annual value of your distance sales into the UK and the Isle of Man is no more than £70,000 (known as the 'distance selling threshold'), then you charge VAT on your VAT taxable sales at the rate that applies in your own country. You account for it there too. This threshold is currently £70,000.
If the value of your distance sales goes over the threshold then you have to register for UK VAT. You then charge VAT on your VAT taxable sales at the UK rate instead of using your own country's rate and account for it here.
Even if you don't have to register for UK VAT as a distance seller, you can apply to register voluntarily.
If you distance sell excise goods like alcohol and tobacco then you'll have to register for UK VAT and Excise Duty no matter how much your sales are worth.
Not all sales of goods from outside the UK are distance sales.
Distance selling only occurs when a customer isn't VAT-registered. So if you sell goods to VAT-registered customers in the UK then this isn't distance selling, even if you're in another EU country. Sales to VAT-registered customers don't count towards the total value of your distance sales.
Supplies to VAT-registered customers are covered by the rules in your own country and so a UK customer will account for acquisition VAT in the normal way.
Distance selling only occurs when goods are sold from one EU country to another. So if you're outside the EU and you sell goods to customers in the UK then this is never distance selling for VAT purposes. Note that the Channel Islands are not part of the EU. However, your customers should be aware that they may have to pay UK import VAT on the goods when they arrive in the UK. They may also have to pay duty.
Read about tax on goods ordered from or bought abroad
Check which countries are in the EU for VAT purposes
You'll need to register for UK VAT if the value of your distance sales into the UK during a calendar year (1 January to 31 December) goes over the distance selling threshold. This is currently £70,000. So you must keep proper records of your distance sales to the UK.
If you distance sell any excise goods like alcohol and tobacco into the UK then you always have to register for UK VAT. It makes no difference how much your distance sales are worth. You also have to register for UK Excise Duty. You'll have to account for the VAT and Excise Duty in the UK. You can read more about the procedures for distance selling excise goods like alcohol and tobacco in Notice 203A, 'Registered consignees'.
Notice 203A - Registered Consignees
To work out how much your distance sales are worth, add up the total value of all the VAT taxable distance sales you make into the UK and the Isle of Man, including any zero-rated goods. However, don't include the following:
Find out what is a New Means of Transport for VAT purposes
As soon as the value of your distance sales goes over the distance selling threshold you have to register for UK VAT. You have 30 days from this date to send a completed form VAT 1A 'Application for Registration - Distance Selling' to HMRC. Your registration date is the date when the value of your distances sales went over the threshold, and the date from which you have to start accounting for UK VAT on your sales.
For example, if the value of your distance sales into the UK went over £70,000 on 15 June you would have until 15 July to fill in form VAT 1A and send it to HMRC. Your registration date would be 15 June.
Go to form VAT 1A 'Application for Registration - Distance Selling'
Find out how long it takes to be registered and how to account for VAT in the meantime
Even if you don't have to register for UK VAT, you may choose to do so if you think it would help your business.
If you don't have to register for UK VAT because the value of your distance sales isn't over the threshold and you don't sell any excise goods, you can apply to register if you want to. You'll have to do all of the following:
If you don't have to register for UK VAT and you don't yet make distance sales into the UK, you may still be able to register if you intend to start making distance sales. You'll need to:
If HMRC doesn't think you really intend to make distance sales in the UK then they may turn down your application.
Go to form VAT 1A 'Application for Registration - Distance Selling'
If you have to register for UK VAT as a distance seller, or if you want to register even though you don't have to, you'll need to fill in form VAT 1A 'Application for Registration - Distance Selling' and send it to HMRC.
When you register you can notify HMRC that you're appointing a tax representative or an agent to deal with your UK VAT affairs. Or if you prefer you can deal directly with HMRC yourself.
You can download form VAT 1A from the HMRC website but you can't yet register online. You'll need to print the form out, fill it in and send it to:
HM Revenue & Customs
Deansgate
62-70 Tettenhall Road
Wolverhampton
WV1 4TZ
Form VAT 1A comes with notes to help you fill it in. You can download these separately.
Go to form VAT 1A 'Application for Registration - Distance Selling' and help notes
Find out how to appoint a tax representative to deal with your UK VAT affairs
You may have to wait a few weeks after you send off your application form before you receive your registration confirmation and details. If you've had to register because your distance sales have gone over the threshold, you must still account for UK VAT in the meantime. However, you won't be able to issue UK VAT invoices until you receive your VAT registration number.
If you apply for voluntary registration - that is, you decide to register for UK VAT even though you don't have to - you can chose the date when you want your registration to start. If you don't receive your registration details by that date, you'll have to start accounting for UK VAT from that date onwards, but you won't be able to issue UK VAT invoices.
How long it takes to get registered for VAT and what to do in the meantime
Once you're registered for VAT in the UK you'll have to add UK VAT to your prices at the appropriate rate when you make VAT taxable distance sales. Different types of goods have different VAT rates in the UK, so you'll need to check which rates apply to the goods you sell.
You'll also have to keep proper VAT records and send UK VAT returns to HMRC. And you'll have to follow all the other rules for operating VAT correctly in the UK.
Check the different rates of VAT in the UK
Read more about charging VAT in the UK
Find out how to complete and send in a VAT return
You can handle your UK VAT affairs yourself if you want to. If you're not established in the UK then you'll deal directly with the Non-Established Taxable Person Unit in Aberdeen once you're registered.
You may find it convenient to appoint a tax representative to deal with your VAT affairs in the UK. You'll still have to fill in form VAT 1A to apply for UK VAT registration. And you'll have to fill in form VAT 1TR to tell HMRC that you've appointed a representative. Once you've done that, your representative will be able to deal directly with HMRC on your behalf.
Find out more about appointing a representative or agent to handle your VAT affairs
If you're going to deal with your UK VAT affairs yourself rather than use a UK tax representative or an agent then you may find it quicker and easier to do things online. This can be particularly useful when you're based outside the UK.
Using the HMRC VAT Online Service to file your VAT Returns online can help you avoid postal delays and may give you extra time to pay. You must pay electronically - even if you have a non-UK bank account.
Find out how to sign up to use VAT online services
If you stop making distance sales into the UK, including sales of excise goods like alcohol and tobacco, then you must apply to cancel your registration. You must also apply to deregister if you previously intended to make distance sales but you no longer intend to.
If you had to register for UK VAT because the value of your distance sales into the UK went over the registration threshold, you can apply to cancel your registration if either of the following are true:
If you decided to register for UK VAT even though the value of your distance sales did not exceed the threshold, you may not be able to deregister straight away. You'll normally have to wait until the end of the second calendar year following the year in which you registered.
