Foreign Companies and VAT

HM Revenue and Customs defines a non-established taxable person (NETP) as “any person who isn’t normally resident in the UK, doesn’t have a UK establishment and, in the case of a company, isn’t incorporated in the UK.”

Unlike companies or individuals based in the UK, NETPs must register for VAT when taxable supplies, regardless of value, are made in the UK. Voluntary registration can be made if there is an intention to trade within the next 30 days. This is advantageous as it enables the company claim back VAT paid on purchases or expenses.

NETPs Tax Representatives and Agents

NETPs may appoint a representative or an agent to manage their VAT affairs including submission and payment.

If a tax representative is appointed, they must keep all records and accounts and account for VAT on the company’s behalf. They are also jointly and severally liable for any VAT debts incurred by the company.

If an agent is appointed, the arrangement is subject to the contract and they are not held jointly and severally liable for any VAT debts incurred by the company. A letter of authority is required – the following wording is suggested by HMRC:

(Insert principal’s name) of (insert principal’s address) hereby appoints (insert name of UK agent or employee) of (insert address of UK agent or employee) to act as agent for the purpose of dealing with all their legal obligations in respect of VAT.

This letter authorises the above-named agent to submit VAT returns and any other document needed for the purpose of enabling the agent or employee to comply with the VAT obligations of the principal.

Signed (insert principal’s signature)

Date (insert date)

For help getting set up or submitting returns, contact Phoenix on 0044 7803704496 or go via the ‘Contact’ tab above.