Many non-resident sellers assume they only register for UK VAT after passing £90,000 in sales. That threshold is for UK-established businesses. If you are not established in the UK, a different rule applies — and it can require VAT registration from your very first sale.
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If you sell to customers in the United Kingdom, you have probably heard that you only need to register for VAT once your turnover passes £90,000. For many non-resident sellers, that belief is wrong — and acting on it can be expensive. The £90,000 figure is the threshold for businesses established in the UK. If your business is not established in the UK, a completely different rule applies, and it can require you to register for VAT from your very first sale.
What Is a Non-Established Taxable Person?
UK VAT law uses the term "non-established taxable person," or NETP. HMRC defines it simply: an NETP is any person who does not have a UK establishment.
A UK establishment exists where the central management and administration of the business is carried out, or where the business has a permanent physical presence with the human and technical resources to make or receive supplies. HMRC is explicit on one point that catches non-resident founders out: a registered office, a serviced office, or a virtual office address on its own is not enough to create a UK establishment.
This means two groups are routinely NETPs. The first is the obvious one: an overseas business — including a US LLC or any non-UK company — selling into the UK. The second is less obvious: a person who has formed a UK limited company but runs it entirely from abroad, using only a virtual or registered-office address. Incorporating in the UK does not automatically give you a UK establishment for VAT.
The Rule That Surprises People: No Threshold
Here is the part that matters. HMRC's own guidance (VAT Notice 700/1) states that if you are a non-established taxable person, the registration threshold does not apply to you. You must register for VAT if you make taxable supplies of any value in the UK.
There is no £90,000 cushion. There is no "small seller" allowance. If you are an NETP and you make — or expect within the next 30 days to make — a taxable supply in the UK, you are required to register, and to notify HMRC within 30 days.
What Counts as a Taxable Supply in the UK
VAT depends on where the supply takes place, not on where you live. Common situations that create UK taxable supplies for a non-resident seller include holding stock in a UK warehouse (including fulfilment-centre inventory) and selling it to UK buyers, and supplying certain services treated as taking place in the UK. Selling physical goods that are located in the UK at the point of sale is the classic trigger.
Where Online Marketplaces Change the Picture
There is one important relief. If you are an overseas seller and all of your UK sales are made through an online marketplace to non-business customers, the marketplace itself is generally responsible for accounting for the VAT, and you can apply to HMRC for an exemption from registration.
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That relief is narrower than it sounds. It stops applying the moment you sell through your own website, sell to UK business customers, or want to recover import VAT on goods you bring into the UK. Many sellers mix marketplace and direct sales without realising that the direct channel alone can pull them back into a registration requirement.
Why Getting This Wrong Is Expensive
The cost of missing this is not theoretical. If HMRC determines you should have registered earlier, your registration is back-dated to that date. You then owe VAT on every taxable sale made since then — and because you never charged your customers VAT, that money comes out of your own margin.
On top of the back-dated VAT, HMRC can apply a failure-to-notify penalty under Schedule 41 of the Finance Act 2008. The penalty is calculated as a percentage of the VAT due: broadly up to 30% for a non-deliberate failure, and significantly higher where the failure is judged deliberate. Interest can also apply. A seller who quietly traded for two years "under the threshold" can face a sudden, large, and entirely avoidable bill.
What to Do
If you sell into the UK and you are not established there, do not rely on the £90,000 threshold. Check whether your activity creates a UK taxable supply, look at whether your sales genuinely all run through a marketplace to consumers, and if you are liable, register and notify HMRC within the 30-day window. If you are unsure whether your structure makes you an NETP — particularly if you have a UK company but operate it from abroad — it is worth getting that assessed before sales build up rather than after.
Have Questions About Your Own Situation?
VAT status depends on the precise facts of how and where your business operates, and the line between "established" and "non-established" is not always obvious. If you would like to understand where you stand, the MP Partner experts team is happy to talk it through with you. No pressure, no hard sell, just clear answers.
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MP Partner Team
Specialist in US and UK company formation for non-residents. Helping international entrepreneurs build their legal presence.