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Am I Allowed to be Registered for the VAT?

If my newly registered company will not trade in the UK, am I allowed to be registered for the VAT?

UK Company Trading Overseas and VAT Registration

If my newly registered company will not trade in the UK, am I allowed to be registered for the VAT? Owning a business is many people's ambition, and a limited company set-up has many advantages for the budding entrepreneur, allowing them to keep their own assets separate from the private company, and therefore limiting the liability they have.

If you register a UK private company but plan to trade abroad, you may still be liable to pay VAT in the UK. The rules are fairly complicated and differ depending on whether you are supplying physical goods or services, as well as what those particular services or goods are. For advice on registering for VAT in the UK or abroad, contact an expert, such as Coddan.

Trading goods: if you are based in the Great Britain and trade physical goods within the UK then clearly, you are liable for VAT. If you are based in the United Kingdom and supply another EU country, the supply can be zero rated, provided it is a business. If the customer is non-commercial then you must pay UK VAT, and you may also need to register for VAT in that EU country. If you are supplying countries outside the EU then VAT becomes irrelevant.

Supplying services: services have no physical point of delivery so the rules are a little more complicated. Generally speaking, you will be liable for UK VAT if:

  • Your head, or only, office is within the UK and you have no permanent offices in other countries
  • You are UK-based and have permanent offices in other countries but your UK office is the main one involved in supplying services
  • You are not UK-based but you have a permanent office in the UK which supplies services
  • You have neither a permanent office or business in the UK but your business is a limited company registered within the UK
  • You don't have a permanent office or business within the UK but you usually reside here

If you have offices in the UK and in other countries, you need to consider what each office contributes towards the supply of services. For example, if your head office is in the UK, but you supply services to local French businesses through a French subsidiary, then you should pay VAT in France, and not the UK. This is true even if the head office supplies the same services to the UK market.

As you can see, the rules concerning overseas trading are complicated and involved. To make sure you take the correct, legal course of action it is best to consult an expert in VAT and company set-up, such as Coddan.