The United Kingdom joined the European Union in 1973 but is not a member of the Eurozone, and trades in Pounds Sterling. The beginning of the ‘Brexit’ process, culminating in an exit from the European Union around 2019, will lead to substantial changes in the paying of tax for EU goods and services.

VAT rates in the UK

The standard rate of VAT is 20%, and reduced rates of 0% and 5% are available.

VAT registration in the UK

The VAT registration limit in the UK is £81,000 for established businesses, and zero for non-established businesses.

Distance sales have a limit of £70,000 for VAT registration.

The format for a VAT identification number is: GB 123456789 (10 11 12). Every company must hold a number like this in order for accurate taxation.

VAT returns can be submitted monthly or quarterly and annual returns are not required.

Are there any Intrastat thresholds in the UK?

Yes. There is a limit of £1,200,000 for arrivals and £250,000 for dispatches. However, Brexit is seen as being likely to result in the phasing out of Intrastat.

VAT recovery in the UK

  • Is VAT recovery permitted for non-established non-EU businesses?

Yes, but only on a reciprocity basis.

  • Are there any non-VAT recoverable expenses?

Yes, recovery of input tax is restricted on certain items, i.e. business entertainment and cars.

Reverse charge applies to the majority of cross border services. An extended charge applies to services supplied to a UK VAT registered customer by a non-established business.

Requirements and regulations in the UK

A tax representative may be required for businesses established in a non-EU country.

Use and enjoyment rules in the UK apply to aspects such as transport hire and telecommunications services.

The period of VAT recovery by tax authorities has a timescale of 4 or 20 years in order to prevent fraud.

Similarly, there is a period of 4 years for VAT deductions and refunds.

Please contact us for further information about paying taxes in the UK, and a member of our team will be happy to help you.


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