VAT for Non-Residents: A Complete UK Guide

Ryan Patrick

• 10 min read
VAT for Non-Residents: A Complete UK Guide

VAT can be one of the more confusing parts of running a UK-facing business from overseas. A founder may live in Nigeria, the UAE, India, the United States, or elsewhere, while selling to customers in the UK through an overseas company or operating a UK limited company without personally living in Britain.

The key point is this: UK VAT obligations are not determined simply by where the business owner lives. What matters is the business's establishment, what it sells, where its customers are located, where goods are held or dispatched, and the applicable place-of-supply rules. For some overseas businesses, there is no £90,000 VAT registration threshold. HMRC states that a business based outside the UK that makes taxable supplies in the UK may have to register for VAT regardless of turnover.

This guide explains how UK VAT works for non-resident businesses, when registration is required, how the rules differ for goods and services, and what international founders should consider before they start trading.

What Does “Non-Resident” Mean for UK VAT?

“Non-resident” is commonly used to describe a person or business that is based outside the UK. However, VAT uses more precise concepts. One of the most important is the Non-Established Taxable Person (NETP). Broadly, a NETP is a business that does not have a business establishment or fixed establishment in the UK but makes, or intends to make, taxable supplies in the UK. This distinction matters because an overseas business can potentially have a UK VAT obligation even when its turnover is nowhere near the standard UK threshold.

Example: Imagine a company incorporated and managed in Dubai that sells physical products directly to UK consumers. The company has no UK office and its annual UK sales are only £40,000. It would be a mistake to automatically conclude that the company is below the £90,000 threshold and therefore has no VAT obligation. The rules for overseas businesses can operate differently.

Do Non-Residents Have to Register for UK VAT?

For a UK-established business, mandatory registration generally applies when taxable turnover exceeds £90,000 in the previous 12 months or when the business expects taxable turnover to exceed £90,000 within the next 30 days. For a business based outside the UK, however, HMRC states that registration can be required regardless of taxable turnover where the business is outside the UK and makes, or expects to make, taxable supplies in the UK. This is one of the biggest differences international entrepreneurs need to understand.

The Practical Test

Before asking “Have I reached £90,000?”, a non-resident business should ask:

  • Where is my business established?
  • Do I have a fixed establishment in the UK?
  • What exactly am I selling?
  • Where is the supply treated as taking place?
  • Is my customer a business or consumer?
  • Is the supply taxable, exempt, or outside the scope?
  • Does the reverse charge apply?
  • Are there special rules for goods, digital services, land, or other categories?

Only after answering those questions can you determine whether UK VAT registration is required.

UK VAT for Non-Resident Companies vs UK Companies

A common misconception among overseas founders is that forming a UK limited company automatically makes the owner a UK resident for tax and VAT purposes. It does not. A person can live outside the UK while owning and directing a UK company. Equally, an overseas company can make UK supplies without incorporating a UK company. These are separate questions:

  • Where is the company incorporated?
  • Where is the company established for VAT purposes?
  • Where is the owner resident?
  • Where is management and control exercised?
  • Where are goods located?
  • Where are customers located?
  • Where is the relevant supply treated as taking place?

For VAT, the location and nature of the business activity can be more important than the founder's personal address. This is particularly relevant to global founders establishing UK companies. A platform such as IncorpUK may be relevant to the company formation and administrative side of setting up a UK business, but VAT treatment still needs to be assessed based on the company's actual activities.

VAT on Services Sold by Non-Residents

Services are often more complicated than they initially appear because UK VAT depends heavily on place of supply. HMRC's general rule is that for most services supplied to a business customer, the place of supply is where the customer belongs. For supplies to consumers, the general rule is usually based on where the supplier belongs, although numerous exceptions exist.

Consider a Nigerian consulting company providing management consulting to a UK limited company. The fact that the consultant is based in Nigeria does not, by itself, answer the VAT question. You need to establish the customer's status, the nature of the service, and whether a special place-of-supply rule applies.

Business-to-Business (B2B) Services

For many B2B services supplied by an overseas business to a UK business, the reverse charge can apply. HMRC explains that where an overseas business supplies taxable services to a UK business, the UK recipient will usually account for VAT under the reverse charge. In such circumstances, the overseas supplier's service is generally not treated as a taxable UK supply for the purpose of determining its UK VAT registration liability. This can be particularly important for international consultants, software companies, marketing agencies, and professional service providers.

Exceptions to the Rule

The reverse charge is not a universal escape from UK VAT. Special rules can apply to services involving:

  • UK land and property
  • Events and admission
  • Entertainment
  • Certain transport services
  • Private consumers
  • Electronically supplied services
  • Other categories subject to specific place-of-supply rules

If your service does not fit neatly into the general B2B rule, specialist VAT advice may be appropriate.

VAT on Goods Sold to UK Customers

Physical products introduce another layer of complexity. A non-UK business selling goods into Britain needs to consider:

  • Where the goods are located when sold
  • Whether the seller imports them
  • Who acts as importer
  • The value of the consignment
  • Whether the customer is a business or consumer
  • Whether an online marketplace is involved
  • Import VAT and customs duties
  • Whether the seller has stock in the UK

The VAT treatment can change depending on these facts.

Goods Imported into the UK

A business importing goods into the UK may have import VAT obligations. This is separate from the question of whether the business must charge VAT on subsequent domestic sales. For international e-commerce businesses, it is therefore important to distinguish between:

  • Import VAT: VAT arising when goods enter the UK
  • Domestic VAT: VAT arising on taxable supplies made in the UK

The two can interact, but they are not the same thing.

The £135 Rule for Overseas E-Commerce Sellers

Low-value consignments have special rules. HMRC explains that goods sold directly to UK consumers in consignments valued at £135 or less, subject to the applicable conditions, are treated as supplied in the UK. An overseas seller generally needs to charge UK VAT at the point of sale and register for UK VAT unless an exemption applies.

This is highly relevant to international Shopify stores, independent e-commerce businesses, and sellers using other online sales channels. For example, a US company selling £50 products directly to UK consumers cannot necessarily assume that the UK customer will simply pay import VAT when the package arrives. The seller's VAT obligations may arise at the point of sale.

What If You Sell Through Amazon or Another Marketplace?

Online marketplaces have their own VAT rules, particularly where an overseas seller is involved. HMRC has specific rules under which an online marketplace can become responsible for VAT on certain sales made by overseas businesses. For example, HMRC states that marketplaces can be liable for VAT on goods of any value that are located in the UK at the point of sale and sold by an overseas business through the marketplace.

This is one reason Amazon sellers should not determine their VAT position solely by looking at the amount Amazon pays into their bank account. The underlying supply chain matters. A seller should know:

  • Who owns the goods
  • Where inventory is stored
  • Whether Amazon holds stock in UK fulfilment centres
  • Who is responsible for importation
  • Whether the customer is a business or consumer
  • Whether the marketplace is treated as making a deemed supply

UK VAT and Digital Services

Digital businesses need particular care. A non-resident company selling software subscriptions, online courses, downloads, hosting, memberships, or other digital products to UK customers needs to determine whether its supplies fall under the rules for electronically supplied services and where those supplies take place.

The general B2B/B2C rules do not always tell the whole story because special rules apply to certain electronic services. For example, a US SaaS company selling subscriptions to UK consumers cannot simply treat the transaction in exactly the same way as a US company providing bespoke consulting services to a UK corporation. The product, customer type, and place of supply all matter.

What If a Non-Resident Business Only Sells to UK Businesses?

This is an important scenario because the answer can be very different from selling directly to consumers. Suppose a Singapore company provides IT consulting exclusively to UK VAT-registered companies. If the services fall under the normal B2B place-of-supply rule and the UK customer accounts for VAT through the reverse charge, the Singapore company may not need to register for UK VAT solely because it has UK customers. HMRC specifically notes that a business is not required to register where all its UK supplies are subject to the reverse charge.

But this should not be treated as a blanket rule. If the company starts supplying UK consumers, rents UK property, holds inventory in Britain, or provides services covered by special place-of-supply rules, the VAT position can change.

UK VAT Registration for Non-Residents

Where registration is required, the process is handled through HMRC. A limited company registering for VAT generally needs information such as:

  • Company registration number
  • Business bank account details
  • Unique Taxpayer Reference (UTR)
  • Annual turnover
  • Estimated taxable turnover for the next 12 months
  • Relevant Corporation Tax, PAYE, and Self Assessment information

For an overseas founder, having a UK company, UTR, and business banking arrangements does not automatically determine the VAT outcome. HMRC will be concerned with the underlying facts of the business.

What Happens After VAT Registration?

VAT registration brings ongoing obligations. A VAT-registered non-resident business generally needs to:

  • Charge VAT where applicable
  • Issue compliant VAT invoices
  • Maintain VAT records
  • Calculate output and input VAT
  • Submit VAT returns
  • Pay VAT due to HMRC
  • Comply with applicable Making Tax Digital (MTD) requirements
  • Retain evidence supporting the VAT treatment of transactions

HMRC says businesses can generally start charging VAT and reclaiming eligible VAT from their effective date of registration. That date matters. A business that should have registered but delayed doing so may become liable for VAT on supplies made from the date it should have been registered. HMRC may also impose a penalty depending on the circumstances.

Can a Non-Resident Business Voluntarily Register?

Voluntary registration can be available in appropriate circumstances, but the rules are more nuanced for businesses that do not make or intend to make taxable supplies in the UK. HMRC's guidance contains specific conditions governing voluntary registration for businesses without UK taxable supplies. Therefore, an overseas founder should not assume that registering for VAT is simply a strategic choice whenever the business wants a VAT number. The eligibility rules need to be checked first.

A Practical VAT Checklist for Non-Resident Businesses

Before trading with UK customers, work through this checklist:

1. Business Structure

  • Where is the company incorporated?
  • Where is it actually established?
  • Does it have a UK office, staff, or fixed establishment?
  • Is the owner personally resident outside the UK?

2. Sales

  • Are you selling goods, services, or both?
  • Are customers businesses or consumers?
  • Are customers in the UK, EU, or elsewhere?
  • Are supplies taxable, exempt, or outside the scope?

3. Goods

  • Where are goods located when sold?
  • Who imports them into the UK?
  • Are you storing stock in Britain?
  • Are you using Amazon FBA or another UK fulfilment service?
  • Are consignments £135 or less?

4. Services

  • Where does the customer belong?
  • Does the general B2B or B2C rule apply?
  • Is the service subject to a special place-of-supply rule?
  • Could the reverse charge apply?

5. Compliance

  • Do you need a UK VAT registration?
  • What is your effective registration date?
  • Can you recover input VAT?
  • Do you need to comply with Making Tax Digital?
  • Are there VAT obligations in countries outside the UK as well?

Common VAT Mistakes Made by Non-Residents

  • Mistake 1: Assuming £90,000 always applies: The £90,000 threshold is highly relevant to UK-established businesses, but non-established businesses can have a registration obligation regardless of turnover.
  • Mistake 2: Confusing company registration with VAT registration: A Companies House registration does not automatically settle your VAT position.
  • Mistake 3: Treating every UK customer as the same: A UK consumer and a UK VAT-registered company can produce very different VAT outcomes.
  • Mistake 4: Ignoring where stock is stored: An overseas e-commerce company may think of itself as entirely foreign while its inventory is physically sitting in a UK fulfilment centre. That physical reality can have major VAT consequences.
  • Mistake 5: Assuming the reverse charge always applies: Reverse charge treatment depends on the nature of the supply and customer. Special rules can override the general position.

Frequently Asked Questions

Do non-residents have to pay UK VAT?

Potentially. A non-resident business can have UK VAT obligations when it makes taxable supplies in the UK. The rules depend on establishment, place of supply, customer type, goods, services, and applicable special rules.

Is there a £90,000 VAT threshold for non-resident businesses?

Not necessarily. HMRC states that businesses based outside the UK can be required to register regardless of turnover where they make taxable UK supplies.

Can a foreign company sell to UK customers without registering for VAT?

Sometimes. For example, certain B2B services may fall under the reverse charge, meaning the UK customer accounts for VAT. But other supplies—particularly certain B2C transactions and UK goods sales can create a registration obligation.

Does a UK company owned by a non-resident need VAT registration?

Not automatically. The company's VAT position depends on its taxable supplies and circumstances. The owner's foreign residence does not, by itself, determine whether VAT registration is required.

Do overseas Amazon sellers need UK VAT registration?

Potentially. The answer depends on factors including where inventory is held, whether goods are sold through a marketplace, the value of consignments, and who is responsible for the relevant supply.

Can a non-resident business reclaim UK VAT?

A VAT-registered business may be able to recover eligible input VAT, subject to the normal rules. However, VAT registration and VAT recovery are separate questions and not every expense qualifies.

Does the reverse charge remove the need for VAT registration?

Not always. If all relevant UK supplies are subject to the reverse charge, the overseas business may not need to register for those supplies. But other transactions can change the position.

Can a non-resident use a UK business bank account without being VAT registered?

Yes. Business banking and VAT registration are separate matters. A company can have a UK business bank account without necessarily being VAT registered, although its banking arrangements may form part of HMRC's wider understanding of its business activities.

Conclusion: UK VAT Is About the Supply, Not Just the Founder

For non-resident entrepreneurs, the biggest VAT mistake is looking for a single threshold or rule that answers every situation. There isn't one. A business based outside the UK can face VAT obligations even when its turnover is below £90,000. At the same time, an overseas business selling services to UK companies may find that the reverse charge means it does not need to register for those supplies.

The difference comes down to the details: what you sell, who you sell it to, where the supply takes place, where your goods are located, whether you have a UK establishment, and whether a special VAT rule applies. For global founders, the safest approach is to establish the VAT position before trading rather than trying to correct it after sales have accumulated.

If your business sells into the UK, particularly through e-commerce, Amazon, SaaS, digital products, consulting, or cross-border services, map the supply chain first. Once you understand the transaction, the VAT answer becomes much easier to determine and much harder to get wrong.