VAT registration with no UK establishment
A UK-established business registers for VAT once its taxable turnover passes £90,000. A business with no UK establishment making taxable supplies here has no threshold at all and registers from the first one.
A UK-established business registers for VAT once its taxable turnover passes £90,000. A business with no UK establishment making taxable supplies here has no threshold at all and registers from the first one.
The four things to know
- The £90,000 threshold applies only to a business established in the UK
- A non-established business registers from its first UK taxable supply
- Establishment turns on where management sits, not on an address
- A UK subsidiary run from the UK is established here in its own right
A UK company registers for VAT once its taxable turnover passes £90,000 in a rolling twelve months. A business with no UK establishment making taxable supplies into the UK has no such threshold at all, and registers from the first one, whatever it is worth. The two rules sit side by side in the same VAT Notice, and a group selling into the UK before its subsidiary exists is usually on the wrong side of the second one without having checked.
What counts as a UK business establishment
HMRC's test has two parts, and either one is enough. A business is established in the UK where the essential management decisions are made and the central administration is carried out here. Separately, a business is established here if it has a permanent physical presence with the staff and other resources needed to make or receive taxable supplies, even where the decisions themselves are taken elsewhere. Neither test is about where the company is incorporated, and neither is satisfied by a registered office, a mail-forwarding address or a UK bank account on its own.
This is a different question from the UK permanent establishment test that decides corporation tax. A business can be established in the UK for VAT while having no UK permanent establishment for tax. The reverse is also common: a salesperson who creates a corporation tax permanent establishment by closing deals here does not, on their own, give the overseas company a VAT business establishment, because that test looks at management and administration, separately from where the selling happens.
The non-established taxable person test
A business that fails both parts of the establishment test is a non-established taxable person, NETP for short: not normally resident in the UK, with no UK business establishment, and, if it is a company, not incorporated here. An NETP has no VAT registration threshold. It must register once it makes a taxable supply in the UK, or expects to make one within the next thirty days, and the value of that supply does not come into it. A single UK sale worth a few hundred pounds carries the same registration obligation as one worth a few hundred thousand.
The thirty-day forward look matters as much as the first-supply trigger. A group that has agreed a UK contract due to complete in three weeks is already required to register, before the first invoice is raised rather than after.
Why this usually arrives before the UK company does
A US or Indian company signs a UK customer, ships goods or starts delivering a service, and begins incorporating a UK subsidiary to formalise the arrangement at around the same time. For the weeks or months the incorporation takes, the parent itself is the entity making the UK supply, and the parent, sitting entirely outside the UK, is the NETP making it. Incorporating a subsidiary does not reach back and register the parent for the period before the subsidiary existed, because the two are separate legal persons, each tested on its own facts.
Once the subsidiary exists, invoices the UK customers itself, and is run from the UK with a UK manager making the operating decisions, it is established here in its own right. From that point its sales are tested against the ordinary £90,000 threshold, and the parent's registration can be wound down for the supplies the subsidiary now makes instead.
Goods and services are tested the same way
The establishment and NETP tests do not distinguish between goods and services: a business with no UK establishment selling either is an NETP on the same terms. What differs is a separate question, whether a given sale counts as a UK supply at all, which depends on the place-of-supply rules for that particular transaction and is decided transaction by transaction. A company importing goods for sale in the UK also needs an EORI number before the first shipment, applied for alongside the VAT registration.
A software company with no office, no warehouse and no UK staff, licensing its product directly to UK customers, is tested in exactly the same way as a manufacturer shipping machinery to a UK buyer. Neither test asks whether anything physical crosses a border. Both ask only where the business is established, and whether the particular supply is treated as made in the UK.
| UK-established business | Non-established taxable person | |
|---|---|---|
| Threshold | £90,000, rolling 12 months | None |
| Registers from | Crossing the threshold, or expecting to within 30 days | The first UK taxable supply, or expecting to within 30 days |
| Voluntary registration below the threshold | Available, often worthwhile where UK costs are incurred before UK sales | Not applicable: registration is compulsory from the first supply |
What to check this week
- List every UK sale already made, invoiced, or firmly agreed for the next thirty days, goods and services together.
- Decide where the business's management decisions and central administration sit. Where the answer is abroad, and there is no UK office or staff making or receiving the supplies, treat the business as an NETP.
- Where it is an NETP and the list in step one is not empty, register now. There is no threshold to wait for and no grace period for the first sale.
- Where a UK subsidiary is already being incorporated, plan the registration and the switch of invoicing to the subsidiary together, so there is no gap where neither entity is registered for a supply that is happening.
Worked example
An illustration built from the situations we handle. Not a named client.
A Texas-based machinery manufacturer agrees a £340,000 order with three UK buyers and starts shipping three months before its UK subsidiary is incorporated. The US parent has no UK office and no UK staff, and every management decision is still taken in Texas, so it is a non-established taxable person and registers for VAT before the first shipment leaves the US, because the £90,000 threshold was never available to it. Once the UK subsidiary is incorporated, takes over invoicing the UK buyers directly, and is run day to day by a UK-based general manager, the subsidiary is established here in its own right. Its own sales are then tested against the ordinary £90,000 threshold, and the parent's registration is wound down for the supplies the subsidiary now makes instead.
Registering without a UK company already in place
None of this requires the UK subsidiary to exist first. A non-established taxable person applies for its own VAT registration directly with HMRC, under the name of the overseas company, and does not need a UK bank account to do it. Where the business holds no UK account, VAT repayments are paid into an overseas one instead, so the repayment side does not stall the application.
Appointing a UK tax representative to handle the VAT affairs is optional. An NETP can appoint one, using HMRC's dedicated form, to keep the records and account for the VAT on its behalf, or it can register and file the returns itself from abroad. A group already instructing a UK adviser for the incorporation commonly has that adviser handle the VAT registration at the same time, as one part of the same instruction.
Common questions
Does a UK subsidiary automatically get the £90,000 threshold?
Usually, but incorporation alone does not settle it. The subsidiary still has to pass the establishment test in its own right: its own management decisions made in the UK, or UK staff and premises making and receiving its supplies. A subsidiary with a UK registered office and a nominee director, run entirely from the parent's home country, can still be tested as a non-established taxable person despite being a UK company on the public register. A subsidiary with a real UK manager making the operating decisions clears the test from day one and gets the ordinary threshold straightaway.
What exactly counts as a UK business establishment?
Either of two things, and only one needs to be true. The first is that the essential management decisions are made, and the central administration is carried out, in the UK. The second is a permanent physical presence here with the people and resources to make or receive the taxable supplies in question, even where the decisions themselves are made abroad. A registered office, a virtual office, or a UK bank account satisfies neither test on its own, because none of them involves management, administration, or the resources to transact.
Is there a grace period before a non-established business has to register?
No, and the thirty-day forward look can start the obligation before the first sale. A non-established taxable person must register once it makes a taxable supply in the UK, or once it expects to make one within the next thirty days, whichever happens first. A group that has signed a UK contract due to complete in three weeks is already required to register, even though no invoice has yet been issued. Waiting to see whether the first UK sale goes ahead, rather than registering against the expectation, is where the delay usually starts.
We've been trading into the UK for a while. Does incorporating a subsidiary now fix the earlier position?
No, the two questions need separating. Incorporating a UK subsidiary deals with sales the subsidiary makes from the date it starts invoicing. It does not reach back and register the parent, or cancel a liability the parent built up as a non-established taxable person before the subsidiary existed. Where the parent should have registered earlier and did not, that is a separate position to correct, typically by registering for the period it was trading and accounting for the VAT that should have been charged on those sales. The permanent establishment guide covers the equivalent point for corporation tax.
Does this rule work differently for goods and for services?
No, the establishment and non-established taxable person tests are the same for both. What differs is a separate question: whether a particular sale counts as a UK supply at all under the place-of-supply rules for that type of transaction, decided transaction by transaction rather than by whether the seller deals in goods or services. A company importing goods also needs a GB EORI number before the first shipment, applied for alongside the VAT registration, which a services-only business selling licences or subscriptions does not need.
Can a UK-established business below £90,000 register anyway?
Yes, and many do, because registering voluntarily lets a business recover UK VAT on its own costs before its sales reach the threshold. That choice is only available to a business that is established in the UK and therefore has a threshold to be below in the first place. A non-established taxable person has no such choice: registration is compulsory from the first UK taxable supply regardless of value, so the voluntary-or-compulsory question only arises once the business clears the establishment test.
What happens if a non-established business registers late?
The registration is backdated to when it should have started, and VAT is due on the UK supplies made from that date, whether or not it was charged to the customer at the time. HMRC treats a late registration the way it treats any other overdue one: the tax that should have been collected is assessed, and interest and a penalty can follow depending on how late the registration was and how it came to light. Registering before the first UK supply, rather than after a customer or an adviser raises it, avoids the assessment and the interest entirely.
Related guides
Do you already have a UK tax presence?
A UK taxable presence can exist, and corporation tax accrue, for two years before anything is registered. A UK taxable presence is created by what people do here, not by what has been registered.
Employer of record or your own UK company
An employer of record puts one person on a UK payroll in days without an entity. It does not give the group a UK company, and it does not settle whether the parent has a UK taxable presence.
Subsidiary or branch: how to choose
One creates a new UK company. The other extends the existing one into the UK. The choice turns on liability, what the public register shows, and what happens to early losses.
Get a fixed quote
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