UK VAT registration for foreign companies: threshold, timing, and the reclaim maths

Do foreign companies need to register for UK VAT?

Any business — UK or foreign — that makes taxable supplies in the UK must register for VAT once UK taxable turnover crosses £90,000 in a rolling 12-month window. HMRC gives you 30 days from the point you cross the threshold to register.

The trap for foreign SMEs is that the rules for Non-Established Taxable Persons (NETPs) — businesses with no UK establishment — are stricter than for UK-based businesses. If you are an NETP making any taxable supply in the UK, HMRC's default position is that you must register from your first UK sale, with no threshold.

In practice, that means: if you are shipping goods into the UK and selling to end customers, or providing UK-based services, you almost certainly need to register from day one, not at £90k.

What counts as "making supplies in the UK"

This is the definitional question that decides whether you must register. Three common patterns for foreign SMEs:

• You sell to a UK distributor who takes title at your factory (Ex Works). The distributor is the importer of record and makes the UK supply — you do not need to register.
• You import goods into the UK, warehouse them (own or 3PL), and sell to UK customers. You are making UK supplies — you must register.
• You sell direct-to-consumer via a marketplace (Amazon UK, eBay UK). The marketplace is a "deemed supplier" for VAT on sales up to £135 from outside the UK, but if you hold stock in a UK warehouse the marketplace exemption does not apply to that stock — you must register.

The voluntary-registration decision

If you are under the threshold and technically not required to register, you can still register voluntarily. For most SMEs entering the UK, this is the right call — but not always.

Register voluntarily when: you have material UK-side costs (3PL fees, freight, professional services, ad spend) — reclaiming the input VAT typically outweighs the compliance overhead once UK spend passes ~£20k/year. You also unlock GBP-denominated VAT invoicing, which is what UK B2B buyers expect.

Do not register when: you sell exclusively to price-sensitive UK consumers under the threshold and your unregistered price is visibly cheaper (a 20% VAT uplift is hard to swallow at the low-ticket consumer end). Also skip it if your UK-side spend is genuinely negligible in year one.

The registration process, step by step

Registration is free and done online through HMRC. Expect 30–40 working days for the VAT number to arrive — you can trade during that time but cannot issue VAT invoices until the number is issued.

• Get an EORI number first (free, ~5 working days). You need this to import goods into the UK regardless of VAT status.
• Register through the HMRC "Register for VAT" service. NETPs use form VAT1 and, if without a UK bank account, form VAT1TR to appoint a tax representative.
• You will need: business incorporation documents, passport ID for a director, evidence of intended UK trading (contracts, marketplace account, purchase orders), and a bank account (UK-domiciled preferred but not strictly required).
• Once registered, you must file quarterly VAT returns via Making Tax Digital (MTD) — HMRC no longer accepts non-MTD-compliant filings. Use accounting software or an MTD bridging tool.

Do you need a UK bank account or a tax representative?

HMRC does not require an NETP to have a UK bank account, but paying VAT from a foreign account is slow and involves FX cost on every quarterly payment. Most SMEs open a Wise Business or UK challenger-bank account (Starling, Tide, Revolut Business) — free-to-cheap to run and denominated in GBP.

A UK tax representative or agent is not required in most cases, but HMRC can demand one if they have concerns about compliance history. A specialist UK VAT agent typically costs £800–£2,500 per year and files your returns, handles HMRC correspondence, and manages the reclaim process.

Common mistakes that cost real money

The three most expensive VAT mistakes we see foreign SMEs make in year one:

• Registering late. If you cross the threshold and file after the 30-day window, HMRC backdates the effective date, meaning you owe VAT on sales you did not collect VAT on. That comes out of margin.
• Charging VAT before the VAT number arrives. You cannot legally issue a VAT invoice without a VAT number. Show the price as VAT-inclusive with a note that a VAT invoice will follow, then reissue once the number is live.
• Missing input VAT on pre-registration costs. You can reclaim VAT on goods held at registration (bought in the 4 years before) and services (bought in the 6 months before). Most SMEs forget to file this reclaim on their first return.