UK VAT Information
If you are non-UK/cross-border business selling or planning to sell goods or services in the United Kingdom, the latest regulations require that you register and start reporting for VAT as soon as you begin trading or 30 days before your 1st expected VATable sale.
You can always review the latest UK regulations on the HMRC website.
UK VAT Information
VAT was introduced in the UK in 1973 as part of admission to the European Union and applies to transactions that arise from sales of goods or services within the UK. UK has left the EU as of January 1st 2021, and is now free to set its own VAT rules and policies.
The UK has a standard VAT rate of 20%, however, it is also possible to apply for a flat rate VAT of 7.5% if your annual sales remain below £150,000.
The UK VAT system is regulated by HM Revenue and Customs and you can find plenty of information on UK VAT on the HMRC website.
When Should You Register?
If you are importing or selling goods in the United Kingdom you may be liable to account for VAT. Residents and locally established businesses may not be required to register or report VAT if they have not reached the VAT threshold, but can do so on voluntary basis.
It is compulsory to register for VAT if :
You know that your VAT taxable turnover (i.e. the total of all UK sales) will exceed £85,000 within the next 30 days.
Your business had a VAT taxable turnover of £85,000 or more within the past 12 months.
You may also need to register in other circumstances, depending on the type of goods/services you sell.
For non-UK Businesses / Cross-border
For business outside of UK, there is no threshold and you must register from the date you begin selling goods or providing services in the UK, or if you expect to in the next 30 days. So for example, if you are an Amazon marketplace seller with a business registered outside of the UK, you must register as soon as you begin trading, or 30 days before.
It is possible to apply for an exception if you can prove that you have
gone over the threshold due to a special circumstance and you will not
go over this threshold in future.
What Happens if you Register Late?
If you register late, you are expected to back pay to the date you should have registered and there also may be a penalty for late registration (depending on circumstances).
VAT Registration Associated Fees and Timelines
All fee includes: VAT registration, documents translation, certification, fiscal representation and handling notification services.
The registration time scale is estimated and calculated from the time when all required documents have been received and relies on the current workload of the local tax authorities.
Price are in EUR. Prices exclude EORI application, EC Sales list and intrastat filing.
Frequently Asked Questions
Question: Can I use a VAT number from another company?
Answer: No. Each VAT number is unique, you can only use a VAT number that has been issued to your company by HMRC.
Question: What are the risks of using the freight forwarder's VAT number for customs clearance purposes?
Answer: Firstly if multiple customers share the same VAT number for customs clearance, the quality and efficiency of delivery cannot be guaranteed. Furthermore, if the VAT number used for customs clearance and the VAT number on the customer's sales invoice do not match, then the import VAT paid to Customs Clearance cannot be deducted in the VAT during the VAT filing process. In cases where the VAT in the current period is less than the VAT amount paid for imports, the tax refund cannot be issued.
Question: What is the difference between VAT and EORI numbers?
Answer: When goods are imported from outside of UK, HM Revenue and Customs will require an EORI number, and if the importer already has a VAT number, it needs to be activated by HM Revenue and Customs to become a valid EORI number. The EORI number is usually the 9 digits of the VAT number preceded by GB and followed by 000. The EORI number can also be applied for without VAT, but it needs to be applied for together with the information of the first shipment.
Will the Swedish Tax Authority fine me for late filing or payment of VAT?
Yes, late declaration fines are between SEK 500 and SEK 1000. There is no penalty for late VAT payments, but interest on VAT should be paid prior to the date of payment (currently charged at the National Bank of Sweden base rate plus 15% per annum). Incorrect payment or incorrect returns may result in a penalty of 20% of the VAT amount reported incorrectly.