Charging VAT on goods sold direct to customers in the UK
Find out if you need to pay VAT when you sell goods direct to customers in the UK, without the involvement of an online marketplace.
There are different rules if you:
- sell goods from the EU to customers in Northern Ireland, who are not registered for VAT in the UK
- move goods between Northern Ireland and the EU
Check if you’re an overseas seller or established in the UK for VAT purposes
You’re an overseas seller if you:
- do not have a business establishment in the UK
- make taxable sales of goods to customers in the UK
A UK business establishment is a place where either the:
- essential management decisions and business’s central administration is carried out at a location in the UK
- business has a permanent physical presence with the human and technical resources to make or receive taxable sales in the UK
A registered, serviced or virtual office is not enough to create a business establishment.
Goods outside the UK when they are sold
You must work out the consignment value of the goods by deciding their ‘intrinsic value’, this is the price the goods were sold for, not including:
- transport or insurance costs — unless they’re part of the price and not shown separately on the invoice
- any other taxes and charges
You must add the individual values of all goods in a consignment together to get the total value of the consignment, unless sent individually.
Consignments valued at £135 or less
There are different rules for:
- consignments of goods containing excise goods, this includes alcohol and tobacco products — find out more about importing excise goods to the UK
- consignments of goods from Jersey and Guernsey, if VAT is collected and paid to HMRC under the Import VAT Accounting Scheme
If the total value of consignment is £135 or less you must charge and account for VAT.
To do this you will need to:
- know the precise nature of the goods to find out the correct rate of VAT to charge
- register for VAT in the UK
- keep records of the goods sold, and make sure you get accurate information to apply the correct VAT treatment to them
Goods sold to UK VAT-registered businesses
You will not need to charge and account for VAT if the customer is a VAT registered business. The VAT registered business customer will be required to account for any VAT due instead.
You should:
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Ask for their VAT number.
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Confirm it is correct — use the check a VAT number online service.
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Add a note to the invoice (for example, by writing ‘reverse charge: customer to account for VAT to HMRC’).
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Send it to the business customer.
You do not have to register for VAT if you only sell goods that are outside the UK at the point of sale to UK VAT-registered businesses. The UK VAT-registered business will be responsible for accounting for the VAT.
VAT-registered businesses receiving goods bought direct from an overseas seller
If the goods are sold to a business customer in Great Britain, the business receiving goods should account for the VAT on their VAT return using a ‘reverse charge’ procedure.
If the goods are sold to a business customer in Northern Ireland from outside the EU, the business receiving goods may account for the VAT using postponed VAT accounting or any other means of paying import VAT.
Wherever the goods are sold to, the business customer will be able to recover the VAT as input tax on the same VAT Return subject to the normal recovery rules.
Consignments valued more than £135
If the total value of the consignment is more than £135, normal import VAT and customs rules will apply.
Read more information about importing goods and how much tax and duty you’ll need to pay.
If you make changes to the consignment so that its total value goes above £135 the consignment may be subject to import VAT and Customs Duty, and you may have to adjust the VAT already accounted for at the point of sale.
Goods in the UK when they are sold
If you are an overseas seller and you sell goods of any value that are located in the UK at the point of sale you must:
- register for VAT
- charge VAT
- account for VAT
Zero-rated and exempt sales
Zero-rated goods include:
- most food
- children’s clothes
If you are an overseas seller and all your sales are zero-rated you should register by post using a VAT1 form and apply for exemption from registration.
If all your sales are exempt, you do not have to be registered and will not be able to register for VAT.
To find out more about zero-rated and exempt sales, read about VAT rates on different goods and services.
How to register for VAT
You can register for VAT online.
If you choose to use an agent, you must not give them access to your online account.
When you register for UK VAT, you’ll be registered at the address of your principal place of business. This is where official correspondence will be sent.
The principal place of business is where orders are received, managed and the day to day running of the business takes place. This should not be a mail forwarding or registered office address.
Using an agent
You can only have one person at a time as your agent (although an agent can act for more than one person or business).
If you choose to use an agent:
- you’ll need to give your agent enough information to allow them to keep your VAT account, make your returns and pay VAT on your behalf
- your agent must register with HMRC for an agent services account
You’ll need to give authority before we can deal with them. You can do this by:
After you’ve registered for VAT
Once you’re registered for VAT, you must:
- charge VAT at the correct rate on your UK sales
- account for, and pay VAT to HMRC
- declare your total sales (including zero-rated sales) on your VAT return
VAT records
You must keep full records (including VAT invoices) for 6 years from the date any goods are sold.
Find out more about VAT record keeping.
Compliance checks
HMRC carries out compliance checks to:
- make sure you’re paying the right amount of tax at the right time
- make sure you’re getting the right allowances and tax reliefs
- prevent tax evasion
- make sure the tax system is operating fairly