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HM Revenue and Customs Brief 31/12


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15 November 2012 - HMRC

Removal of the VAT registration threshold for businesses which are not established in the UK

Purpose of this Brief

To note that, from 1 December 2012, non-established taxable persons (NETPs) will no longer be able to benefit from the UK VAT registration threshold. They will be required to register for UK VAT when they make their first supply of goods or services here regardless of the value.

NETPs who are already making supplies here will be required to register for UK VAT with effect from 1 December 2012.


This Brief is for NETPs and their agents.


The UK has always allowed its domestic VAT registration threshold (currently £77,000) to apply to NETPs who make taxable supplies in the UK, as well as to UK businesses. NETPs include, for example, non-UK traders at farmersí markets or Irish service suppliers working across the land border. However, a decision (Schmelz C-97/09) in the CJEU (the European Court of Justice) has confirmed that only businesses established in a Member State can benefit from its domestic VAT registration threshold.

Therefore, a new Schedule 1A to the VAT Act 1994 and other consequential changes were made in Finance Act 2012 and come into force on 1 December 2012.

From 1 December 2012, any non-established business which makes or intends to make taxable supplies in the next 30 days has 30 days from the date it formed that intention to notify HM Revenue & Customs (HMRC) that it is required to register for VAT. Businesses which become required to register in the UK on 1 December 2012 will have to notify HMRC of that fact by 30 December 2012.

A business not established in the UK will be required to register from the earliest of the date that it made or expected to make taxable supplies in the UK (but no earlier than 1 December 2012). Non-established businesses which are aware that they will need to be registered from 1 December 2012 (for example, because they are already making supplies in the UK under the current threshold) can provide advance notice to HMRC, and they will be registered for VAT from 1 December 2012.

Existing UK place of supply rules have not been changed. Overseas businesses making only reverse charge supplies of services to the UK will not normally be affected by the removal of the threshold. However, there are some exceptions that are taxable supplies in the UK where they are supplied to a private customer rather than to a business, for example, services in connection with land which is located in the UK or entertainment services when the performance takes place in the UK.

Overseas businesses only involved in distance sales or acquisitions are not affected by the removal of the VAT registration threshold.

Any NETP business which is required or entitled to register for VAT can apply for VAT registration either online or by completing form VAT 1.

More information on UK VAT registration can be found in Notice 700/1 Should I be registered for VAT? on the website. Where you are in any doubt about the correct treatment, please contact the VAT Helpline on Tel 0845 010 9000 or if calling from abroad on +44 2920 501 261.

Notice 700/1 Should I be registered for VAT?

About the Author

© Crown Copyright 2012.

A licence is needed to reproduce this article and has been republished for educational / informational purposes only. Article reproduced by permission of HM Revenue & Customs.

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Article Published/Sorted/Amended on Scopulus 2012-11-22 09:05:38 in Tax Articles

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