This Content Was Last Updated on February 9, 2017 by


This in from ACCA

The VAT registration threshold applying to Non-Established Taxable Persons (NETPs) has changed significantly. Find out how.

There has been a significant change to the VAT registration threshold applying to Non-Established Taxable Persons (NETPs) and HMRC has amended its guidance to reflect the change in VAT Notice 700/1: Should I be registered for VAT?

Due to the change in the place of supply, businesses may have required to be VAT registered in the UK. The place of supply rules are an important part of the VAT rules as they help determine where VAT needs to be accounted for, and changed on 1 January 2010 where two default positions were created:

  • for business to business supplies the default place of supply is where the customer is based
  • for business to non-business the default place of supply is where the supplier is based.

What is a NETP?

An NETP is any person who is not normally resident in the UK, does not have a UK establishment and, in the case of a company, is not incorporated here.

A UK establishment exists if: ‘The place where essential management decisions are made and the business’s central administration is carried out is in the UK … or … the business has a permanent physical presence with the human and technical resources to make or receive taxable supplies in the UK.’

The change is in reference to the threshold: from 1 December 2012 if you are a NETP business and do not have an establishment in the UK and make any taxable supplies in the UK you must register for VAT in the UK.

This is a significant change and will catch NETP businesses that are trading below the current VAT registration threshold and thus are not required to register for UK VAT. From 1 December 2012 they will need to be registered and suffer the administrative burden of submitting VAT returns.

This brings the UK’s NETP requirement for registration in line with many of its European counterparts as many countries have a registration limit of nil, ie you need to register as soon as you make any taxable supplies.

HMRC has recently issued Revenue & Customs Brief 31/12, which provides further details about the changes.