Foreigners to register
From 1 December 2012, a business which is established outside the UK has to register for VAT if it makes any supplies here – it won’t get the benefit of the £77,000 threshold that applies to UK businesses. HMRC have issued a Brief explaining the background to this change, and what ‘non-established businesses’ should do about it.
This doesn’t necessarily apply to all foreigners ‘doing some business’ here. Often, the VAT liability falls on the customer under the ‘reverse charge’ procedure. The main types of business which are likely to be affected are those which bring goods to the UK and sell them here (as opposed to despatching them to a customer in the UK from a foreign country), and those which sell land-related services to non-business customers.
If you deal with a foreign business, whether you are running it or you are a customer, we can advise you on whether this change affects you.