Non-established taxable persons (NETPs): Updated VAT registration guidance

10 April 2024| CATEGORIES: HMRC guidance, Non-established taxable persons, UK, VAT registration| TAGS: , , ,

HMRC have amended VAT Notice 700/1 Who should register for VAT to update information for non-established taxable persons (NETPs).

What is an NETP?

An NETP is any person who does not have a UK establishment.

The Notice has been updated to include the following definition of a UK establishment.

A UK establishment exists if either the:

  • place where essential management decisions are made and the business’s central administration is carried out is in the UK
  • business has a permanent physical presence with the human and technical resources to make or receive taxable supplies in the UK

We would normally consider a company which is incorporated in the UK to have an establishment in the UK as long as is it also able to make or receive business supplies at its registered business address. A registered, serviced or virtual office alone is not enough to create a business establishment.

Section 4.2 of the Notice now includes the following information regarding when an NETP should register for VAT.

Where you’re liable to register because you must tell HMRC
you’re an NETP and you make any taxable supplies in the UK, regardless of their value within 30 days of the date of making the supply
you’re an NETP and you expect to make a taxable supply in the UK in the next 30 days within 30 days of the date that the expectation arose

Circumstances when NETPs may not need to register for VAT

An NETP may not need to be registered for VAT in the UK if:

  • all its sales to the UK are zero-rated;
  • it is an overseas seller and all sales to the UK are made through an online marketplace to non-business customers;
  • it is a business based in an EU member state and sells goods to a ‘non-taxable’ customer in Northern Ireland;
  • all sales to the UK are made to a VAT-registered business in Great Britain (England, Scotland and Wales) who will account for the VAT using the ‘reverse charge’ procedure.

The rules regarding the VAT registration of NETPs can be complex, especially for overseas sellers of goods via an online marketplace.

Please get in touch if you need assistance registering for VAT or require advice on your UK VAT obligations.

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