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UK VAT for overseas sellers – How to stay compliant
If you're selling goods or services to customers in the UK from outside the country, you'll need to navigate some specific VAT rules. For many overseas businesses, these can be tricky and easy to get wrong. This article breaks down what overseas sellers must know to register properly for VAT, meet their legal responsibilities, and steer clear of common mistakes.
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Who needs to register for UK VAT obligations?
While UK businesses usually register for VAT once they pass a turnover threshold of £85,000, the rules for overseas sellers are different and more immediate.
You need to register if you:
You need to register if you:
- Maintain stock in the UK for sale, including goods stored in warehouses or fulfilment centers like Amazon FBA.
- Send goods directly to UK customers where each order is £135 or less.
- Sell products through online marketplaces that require sellers to be VAT registered.
- Provide digital services or goods such as apps, software, or subscriptions to UK customers.
Understanding the £135 order value VAT rule
This is often confusing for sellers. When goods worth £135 or less are sold to UK customers, VAT must be collected at the point of sale rather than at import. It’s the seller’s responsibility to charge VAT correctly during checkout and pay it to HMRC afterward.
Marketplaces like Amazon or eBay sometimes handle this VAT collection themselves, but you still need to keep clear, accurate records to prove VAT was correctly collected.
When might you need a VAT representative for UK Compliance?
If your company is based outside both the UK and the EU, HMRC may require you to appoint a VAT representative. This representative will handle VAT filings and payments for you and take legal responsibility alongside your business.
Because this is a serious responsibility, most VAT representatives ask for some form of financial security before agreeing to assist. Choosing a dependable representative is crucial because any errors on their part can affect your business.
Selling on marketplaces: VAT responsibilities explained
Platforms such as Amazon, eBay, and Etsy are sometimes treated as the “deemed supplier” for VAT. This means:
- For items under £135, the marketplace collects and pays the VAT.
- For items over £135, VAT is typically charged at import, paid either by you or the buyer, depending on the shipping terms.
VAT on digital products and electronic services
Selling digital products or services to UK customers , like apps, online courses, or downloadable content , also means charging VAT. Since Brexit, the EU’s VAT MOSS system no longer covers UK sales. Instead, you’ll need to register under the UK’s non-union VAT scheme and charge VAT at the correct UK rate.
How to register for UK VAT as an overseas seller
You can register via HMRC’s online portal. Prepare to provide:
Most overseas sellers file VAT returns every three months. These returns report total sales, VAT charged, and VAT owed. You must keep records for at least six years. Payments can be made internationally by bank transfer, card, or approved payment services.
- Your official business name and address.
- A brief description of what you sell.
- Your payment details.
- An estimate of your sales to UK customers.
Most overseas sellers file VAT returns every three months. These returns report total sales, VAT charged, and VAT owed. You must keep records for at least six years. Payments can be made internationally by bank transfer, card, or approved payment services.
Following Making Tax Digital (MTD) for VAT compliance
If registered for VAT, you must comply with Making Tax Digital rules. This means keeping VAT records digitally and filing returns using HMRC-approved online VAT return platform. Paper records or manual submissions are allowed only in exceptional cases. Staying compliant reduces errors and makes audits easier.
Common mistakes to avoid with UK VAT compliance
- Assuming the UK’s £85,000 VAT threshold applies to you (it doesn’t for overseas sellers).
- Thinking marketplaces cover all your VAT responsibilities.
- Forgetting to charge VAT on orders under £135.
- Issuing invoices that don’t meet UK VAT rules.
- Keeping VAT records on paper instead of digitally.
Tips for staying compliant with UK VAT rules
- Confirm where your goods are located when sold, since this affects VAT treatment.
- Use checkout systems that automatically calculate the correct VAT.
- If you sell a lot or across multiple channels, consider consulting a UK VAT expert.
- Keep invoices, shipping paperwork, and VAT returns well organized.
- Keep up with any HMRC updates, especially changes after Brexit.
Risks of not complying with VAT regulations
HMRC can:
- Charge interest on late VAT payments.
- Impose fines up to 100% of the VAT owed.
- Hold your goods at customs.
- Ask marketplaces to suspend your selling accounts.
Why complying helps your business grow
Proper VAT handling speeds up customs clearance, builds trust with marketplaces and customers, and might allow you to reclaim VAT on some expenses — all of which can improve your bottom line.
Final thoughts on UK VAT for overseas sellers
If you sell to UK customers from overseas, VAT compliance is a must. Register early, keep thorough records, and regularly review your processes. Making VAT a regular part of your business protects you from costly setbacks and lets you focus on growth.
Frequently Asked Questions:
Your Questions – Answered ,We’re here to help you with anything VAT-related.
1. Who needs to register for UK VAT as an overseas seller?
Overseas sellers must register for UK VAT if they store goods in the UK for sale (including fulfillment centers like Amazon FBA), send goods directly to UK customers where each order is £135 or less, sell through marketplaces requiring VAT registration, or provide digital products or services such as apps or subscriptions to UK customers.
Unlike UK businesses, overseas sellers do not benefit from the £85,000 turnover threshold. Even a single qualifying sale can trigger a VAT registration requirement. Registering ensures you comply with HMRC regulations and avoid penalties, delays in customs clearance, or account suspensions on sales platforms.
Unlike UK businesses, overseas sellers do not benefit from the £85,000 turnover threshold. Even a single qualifying sale can trigger a VAT registration requirement. Registering ensures you comply with HMRC regulations and avoid penalties, delays in customs clearance, or account suspensions on sales platforms.
2. What is the £135 order value VAT rule for UK sales?
The £135 order value rule means VAT must be charged at the point of sale for goods valued at £135 or less sold to UK customers, rather than at import. Sellers are responsible for collecting VAT during checkout and paying it to HMRC.
Marketplaces like Amazon or eBay often collect and remit VAT on behalf of sellers, but it’s important to keep accurate records to prove compliance. This rule aims to simplify VAT collection on low-value goods and helps HMRC track VAT due on consumer sales from overseas sellers.
Marketplaces like Amazon or eBay often collect and remit VAT on behalf of sellers, but it’s important to keep accurate records to prove compliance. This rule aims to simplify VAT collection on low-value goods and helps HMRC track VAT due on consumer sales from overseas sellers.
3. When is appointing a VAT representative required?
If your business is located outside the UK and the EU, HMRC may require you to appoint a VAT representative to handle VAT filings, payments, and record keeping on your behalf. The VAT representative shares legal responsibility for your VAT compliance, so most representatives require financial guarantees before agreeing to act.
This ensures your VAT obligations are met correctly and helps avoid penalties for errors or late filings. Choosing a reliable VAT representative is crucial, as mistakes on their part still impact your business.
This ensures your VAT obligations are met correctly and helps avoid penalties for errors or late filings. Choosing a reliable VAT representative is crucial, as mistakes on their part still impact your business.
4. How do overseas sellers register for UK VAT?
Overseas sellers register for UK VAT through HMRC’s online portal. You’ll need to provide your official business name, address, a description of goods or services, payment details, and estimated UK sales. After approval, HMRC issues a VAT number which must appear on invoices and sometimes shipping documents.
Most overseas sellers file VAT returns quarterly, reporting total sales, VAT collected, and VAT owed. Records must be retained for at least six years. Payments can be made internationally via bank transfer, card, or approved payment platforms. Timely registration and filing help avoid penalties and ensure smooth business operations.
Most overseas sellers file VAT returns quarterly, reporting total sales, VAT collected, and VAT owed. Records must be retained for at least six years. Payments can be made internationally via bank transfer, card, or approved payment platforms. Timely registration and filing help avoid penalties and ensure smooth business operations.
5. What are common mistakes overseas sellers make regarding UK VAT?
Common errors include assuming the UK’s £85,000 VAT registration threshold applies to them (it does not), relying on marketplaces to manage all VAT obligations, forgetting to charge VAT on orders under £135, issuing invoices that do not comply with UK VAT rules, and maintaining VAT records on paper rather than digitally.
These mistakes can lead to fines, penalties, delayed shipments, or account suspensions. Staying compliant requires understanding UK VAT regulations, maintaining accurate digital records, issuing correct invoices, and regularly reviewing your VAT processes to adapt to any changes, especially post-Brexit.
These mistakes can lead to fines, penalties, delayed shipments, or account suspensions. Staying compliant requires understanding UK VAT regulations, maintaining accurate digital records, issuing correct invoices, and regularly reviewing your VAT processes to adapt to any changes, especially post-Brexit.
