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Who is required to register VAT?

VAT registration applies to businesses that:

  • import goods for the UK market,
  • purchase and sell goods in the United Kingdom,
  • store goods in the UK for resale,
  • organise live events, exhibitions, conferences, etc. in the UK.

Overseas businesses should complete form VAT1 to register for supplies of goods or services within the UK and form VAT1A for distance sales to the UK. HMRC may contact the trader applying for registration for further information.

If a non-UK resident foreign entity uses a fiscal agent, it can register online. Non-UK companies from countries with which the UK does not have a tax information exchange agreement may require the appointment of a fiscal agent, who is jointly and severally liable for any tax liability, interest or fines.

Declarations can be submitted on a monthly or quarterly basis. In most cases, however, quarterly settlements are used. After registration, a business will be assigned to one of three VAT accounting groups:

  • Stagger group 1 – settlements for quarters ending March, June, September and December,
  • Stagger group 2 – settlements for quarters ending April, July, October and January,
  • Stagger group 3 – settlements for quarters ending May, August, November and February.

Monthly or quarterly returns must be submitted electronically, via the HMRC website, by the 7th day of the second month following the end of the relevant accounting period.

Penalties resulting from late VAT returns are assessed according to a fixed point system. For each late submission of a VAT return, a taxpayer receives 1 penalty point. Once certain thresholds are exceeded, HMRC will impose a £200 penalty. Any further late declaration will incur an equally high penalty (i.e. £200).

Foreign entities doing business in the UK, must also comply with local regulations in terms of, among other things: invoicing and archiving receipts and records for seven years.

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