VAT Registration When You Run A UK Company From Abroad

You run a UK limited company, but you live and work abroad. Your turnover crossed the VAT threshold, so you applied to register. HMRC has been slow, your effective date of registration has already passed, and now a questionnaire has landed asking where your "principal place of business" really is. It reads like an accusation.

It usually isn't. HMRC asks that question of almost every overseas-run registration now, as a fraud screen. But the temptation it creates is real: to give whatever answer makes the problem disappear fastest. Resist it.

Here is what the question means in law, why "where the business belongs" has nothing to do with where you personally live, and why the honest answer is almost always the better one—even when it feels like the slower road. The whole thing turns on one question, and we will keep coming back to it: where does the business genuinely belong, and have you told HMRC the truth, consistently?

Who Actually Has To Register—The Company, Not You

The first thing to get straight is who the taxpayer is. For VAT, the "taxable person" is whoever makes the supplies—and where a limited company makes them, that person is the company, not you. It is the company that is the "taxable person" under section 3 of the VAT Act 1994, and the registration test in Schedule 1 looks at the company's taxable turnover.

That matters because a company is a separate legal person from the individual who runs it—the bedrock principle from Salomon v A Salomon & Co Ltd [1897] AC 22. Your home, your days in the UK, your personal residence status: none of that decides whether the company must register.

So the question HMRC is really asking is not "where do you live?" It is "where is the company established?" Those are different questions with different answers. You can be tax-resident on the other side of the world while your company is firmly established in the UK—and, just as importantly, the reverse.

This is the misconception that derails people. "I live abroad" is not the same as "my company is established abroad." Hold onto that distinction, because everything else depends on it.

Where Is Your Business "Established" For VAT?

For VAT, a business "belongs" wherever it is established. Section 9 of the VAT Act 1994 recognises two kinds of establishment, and it helps to keep them apart.

A business establishment is the main seat of economic activity—where the central administration sits, where management takes its decisions, where the business is genuinely run from. A fixed establishment is any other place with enough permanence and the human and technical resources to make or receive supplies: a real office or branch with staff and equipment. A postal address is not a fixed establishment. Nor is a mailbox, a server, or an agent acting on your behalf.

These concepts come from retained EU law (the VAT Implementing Regulation 282/2011, articles 10 and 11), which is why HMRC's own manuals and the case law still lean on them.

The leading statement comes from the Court of Justice in Planzer Luxembourg Sàrl (Case C-73/06): a business is established where the essential decisions about its general management are taken and where its central administration functions are carried out—not necessarily where the day-to-day work happens. A postal address, the Court said, is not enough on its own. The fixed-establishment idea—permanence plus human and technical resources—was restated for the modern digital world in Welmory sp z o.o. (Case C-605/12).

Here is the reassuring part. A UK company genuinely run from the UK can still belong in the UK even though its director is personally non-resident—because the test looks at the company's management and administration, not the director's passport. And the converse is equally true: a company whose essential decisions are all taken abroad, with no real UK office or staff, may genuinely be non-established here despite its UK incorporation.

Which of those describes your company is fact-sensitive. Nobody can tell you the answer from the outside; it depends on where the work is really done and where the decisions are really made. That is an inference from your circumstances, not a fixed rule—so the honest exercise is to work out where the business actually belongs before you tell HMRC anything.

The Trap—Running It From Abroad Can Make Registration Harder

Now the counter-intuition. Most people assume that being overseas means a lighter VAT touch. It can mean exactly the opposite.

A non-established taxable person—an NETP, meaning a person with no business or fixed establishment in the UK—does not get the £90,000 threshold. Its threshold is nil. An NETP must register the moment it makes (or expects to make) its first taxable supply in the UK. That rule lives in Schedule 1A of the VAT Act 1994, introduced from 1 December 2012.

So "we run the whole thing from abroad" can move the company from "register only above £90,000" to "register from supply one"—and can expose earlier periods to back-dated VAT and a failure-to-notify penalty. That penalty is behaviour-based and is reduced for an unprompted disclosure; it can also be defeated by a reasonable excuse, such as a genuine, well-founded misunderstanding of the nil-threshold rule. The instinct that overseas means easier is backwards.

There is an important refinement for a UK-incorporated company, though, because such a company is rarely a pure NETP. Schedule 1 paragraph 10 treats a body corporate's usual place of residence as wherever it is legally constituted—the UK. That opens two different doors, depending on whether the company makes UK taxable supplies it has to account for itself:

• No UK taxable supplies (everything is reverse-charged or outside the scope of UK VAT): Schedule 1A does not force you to register, but you are entitled to register under paragraph 10—a person making supplies that would be taxable if made in the UK, with a UK usual place of residence and no UK taxable supplies. Because a UK-incorporated company's "usual place of residence" for this purpose is simply where it is legally constituted (paragraph 10(4)(b)), you can register as a UK person under paragraph 10 even though the company is run from overseas—having no physical UK premises does not, by itself, bar registration. HMRC can still decline an application it is not satisfied is genuine, which is exactly what its "Place Of Business" questions—covered in their own section below—are for. There can be a real upside here, which we come back to under invoicing.
• UK taxable supplies, but no UK establishment: the Schedule 1A nil threshold bites, and you register from your first such supply.

The key point is that paragraph 10 is an entitlement door, not a duty. Which door you are standing in depends entirely on the next question.

Did You Even Need To Register? The £90k Red Herring

This is the most valuable thing in this article, so slow down here. Only the value of taxable supplies made in the UK counts toward the £90,000 threshold. Not worldwide turnover. Not "everything the company invoiced." Just UK taxable supplies.

Whether a supply is made in the UK turns on the place of supply, and for services section 7A of the VAT Act 1994 sets the rule:

• Business-to-business (B2B): the supply is made where the customer belongs.
• Business-to-consumer (B2C): the supply is made where the supplier belongs.

Read that again, because it flips the natural assumption. For a B2B service, your customer's country decides the place of supply—your own location is irrelevant to that question. (Schedule 4A carries exceptions for things like land, events and certain digital sales, but ordinary software and IT consultancy is a "general rule" service, so the rule above applies.)

What actually counts toward the threshold, in plain terms:

Two traps are worth flagging. Zero-rated still counts—people assume "no VAT charged means it doesn't count," but a zero-rated supply is a taxable supply, just at 0%, so it stays in. Only exempt and out-of-scope supplies fall out. And the basis of the count is "the value of taxable supplies," defined in section 4 as supplies "made in the United Kingdom"—which is why out-of-scope income drops out by definition.

Now the worked example. Software and IT consultancy is a general-rule service, so its place of supply follows the client:

• If your clients are overseas businesses, your supplies are generally outside the scope of UK VAT. They do not count toward the threshold—and you may have crossed £90,000 only by wrongly counting income that never belonged in the calculation.
• If your clients are UK businesses, those supplies are made in the UK and do count.

So the very first practical question is not "what did I invoice in total?" It is "where are my clients, and are they businesses?" Recount only your UK taxable supplies before you accept that you breached the threshold at all.

One refinement, because IT contractors often bill through an agency. Your VAT customer is whoever you contract with and invoice—not the end-client further down the chain. If you bill a UK agency that on-sells your work, your supply is to that UK business, even if the ultimate user is overseas. If you are a genuine NETP, the reverse charge in section 8 then applies: the UK agency self-accounts for the VAT, you charge no UK VAT, and you need not register on those supplies. HMRC confirms this in VAT Notice 700/1 (paragraph 9.3): an NETP need not register where all its UK sales go to a VAT-registered business in Great Britain that reverse-charges.

If instead the agency is a disclosed agent merely arranging a direct contract between you and an overseas end-client, your customer is the end-client and the supply is outside UK scope altogether. Which model applies is not decided by the label—it turns on the contract read in its commercial and economic reality (HMRC v Secret Hotels2 Ltd [2014] UKSC 16; Airtours Holidays Transport Ltd v HMRC [2016] UKSC 21). The classification of the supply follows from how the contract is construed, not from how the arrangement is described.

One line on EU clients: since Brexit they are treated like any other overseas client. The only EU-specific wrinkle is the One-Stop-Shop, which applies to automated B2C digital sales—an EU-side matter that bespoke contracting normally avoids.

What HMRC's "Place Of Business" Questions Really Mean

HMRC's pre-registration verification has expanded sharply since 2022 as a fraud-prevention measure—screening for hijacked and "missing-trader" registrations. The questionnaire is usually not an accusation. It is HMRC checking that the registration is genuine.

What it is really looking for is evidence of a genuine company place of business: who actually does the work and where, where the company's management decisions are taken, its bank arrangements, its customer and supplier contracts, and contemporaneous records. The hinge—again—is that this is assessed at the level of the company. A non-resident director does not automatically make the company non-established; a UK company whose central administration is genuinely run from the UK belongs in the UK even if the person at the helm lives abroad (Planzer; Salomon). And if you are a one-person company with no UK staff, that is a fact to state plainly, not a failing to hide—an empty "UK employees" box is itself evidence of where the company is, or is not, established.

The cardinal rule, which we will not soften: answer truthfully and consistently across all of HMRC. Never claim a UK place of business the company does not genuinely have to make the threshold rules fit you better. That answer sits against your other filings, it is the very thing the verification is designed to catch, and it is far more dangerous than the delay you are trying to end.

In practice the check runs in rounds, often over months: an initial "further information" letter with a rigid subject line and a hard deadline, a questionnaire about your services and where your customers are based, and—where establishment is genuinely in doubt—a longer "UK Query Questionnaire" plus identity documents. Treat that deadline as real: if you miss it, HMRC can close the application altogether and make you start registration again—the worst outcome for someone already chasing a delayed EDR. The full choreography—each letter, each deadline, and how to answer the questionnaires—is set out in the companion guide, when HMRC queries or delays your VAT registration.

HMRC Is Taking Weeks—Your Liability Doesn't Wait

Your effective date of registration (EDR) is fixed by when the duty to register arose—not by how long HMRC takes to process the application. HMRC's delay does not move the EDR or reduce the VAT due. Between the EDR and the day your VAT number arrives, the company cannot show VAT separately on its invoices (it has no number yet), but it is still liable for the VAT element of its UK taxable supplies from the EDR—and where that VAT is genuinely due, late-payment interest (currently 7.75%) runs on it until it is paid.

The practical fix: tell customers prices are subject to VAT, invoice at the appropriate gross figure, and then reissue proper VAT invoices—or issue a VAT-only adjustment invoice—once the number arrives. You can also recover pre-registration input VAT under the normal rules.

Now defuse the fear, because it is usually overblown. "HMRC says I owe VAT from the EDR, but I can't go back and raise my rates, so I'll pay it myself." Three points:

• It isn't a rate increase. VAT is added on top and, for a VAT-registered customer, reclaimed. A VAT-only adjustment invoice for the gap period is cash-neutral to them—they pay it and recover it as input tax.
• Check the contract's VAT clause. The genuine out-of-pocket risk is narrow: it bites only if the fee is treated as VAT-inclusive and the customer won't pay an adjustment. The default position is that a stated price is VAT-inclusive unless the contract says otherwise, so the clause matters.
• If the reverse charge applies, there may be no output VAT to find at all. Where your supplies to a UK business are reverse-charged, the customer self-accounts, so there is no output VAT to find—and, with none, no late-payment interest to run either.

There is also a choice to make where the analysis points to no obligation to register. Staying registered has an upside—you can generally still recover UK input VAT on business costs even with no output VAT to charge, which can put the company in a repayment position rather than a nil one. The cost is admin (Making Tax Digital records and returns), not tax.

Withdrawing an application mid-verification carries its own risk: it can read as evasive and prolong scrutiny. The cleaner sequence is usually to answer the verification fully, let HMRC reach a determination, and only then decide whether to stay registered for recovery or deregister (the deregistration threshold is £88,000).

What You Can—And Can't—Appeal

This is where anxious readers most often misfire, so be precise. Section 83(1)(a) of the VAT Act 1994 gives the First-tier Tribunal jurisdiction over registration decisions—a refusal to register, a cancellation, or a dispute about the registration date or EDR.

But that list is exhaustive. The tribunal's jurisdiction is statutory; it has no general "fairness" or judicial-review power (HMRC's own guidance at ARTG3041; Hok). So while your registration is merely pending or being queried, there is no appealable decision yet. The tribunal cannot order HMRC to hurry up, and it cannot order HMRC to stop asking questions. Your first task is to identify whether HMRC has actually issued a decision you can appeal.

Where the grievance is delay or service quality, the remedy sits outside the tribunal entirely: an HMRC complaint, then the Adjudicator's Office, and—only rarely, for a genuine public-law failure—judicial review (R (Glencore Energy UK Ltd) v HMRC [2017] EWCA Civ 1716; and Autologic Holdings plc v IRC [2005] UKHL 54 on not duplicating the statutory appeal route through JR).

Be honest about the authority gap here. There is no cleanly on-point, freely verifiable UK tribunal decision on NETP status or VAT establishment for registration specifically. The points above rest on the statutory framework, the CJEU establishment line (Planzer, Welmory) and HMRC's manuals—not on a neat domestic case. That is the real state of the law, not a gap in this article.

If a decision does exist, you have 30 days to appeal it, with an optional HMRC review beforehand (the review period is 45 days). The detailed mechanics live elsewhere on this site—see how to appeal to the tax tribunal and writing grounds of appeal—so we won't re-derive them. One reassurance: the VAT "pay-first" rule bites on assessments, not on a registration or EDR appeal, so you are not required to pay a disputed sum to be heard (see postponing payment during appeal).

Three Residences, Three Tests—A Warning

It is easy to conflate three different "residence" questions, and an answer optimised for one can create exposure in another.

Correct one common fear straight away: being a VAT NETP does not strip the company of its UK corporation-tax residence. A UK-incorporated company is UK-resident for corporation tax by virtue of incorporation (CTA 2009, s.14), regardless of where it is established for VAT. The three positions can coexist quite consistently.

The real cross-tax danger runs the other way. The same facts you use to show the business is genuinely run abroad—management abroad, no UK administration—also feed a double-tax-treaty tie-breaker. That tie-breaker can make the company treaty-non-resident in the UK under CTA 2009, s.18 and trigger a UK exit charge under s.185 TCGA 1992, on top of possible overseas corporate tax and a foreign permanent establishment.

This is not the place to optimise across all three—it is the place to get joined-up VAT and corporation-tax advice spanning both the UK and your overseas country, working from one consistent factual story.

What To Do Now

1. Recount only your UK taxable supplies before accepting you breached £90,000. Start with "where are my clients, and are they businesses?"—overseas B2B services are usually outside UK scope and do not count.
2. Work out honestly where the company genuinely belongs—where its essential decisions and administration actually sit, not where you personally live.
3. Answer the questionnaire fully and truthfully, and before its deadline. Never claim a UK place of business the company does not have—truthful and consistent beats fast. But do not miss the response deadline either: if you do, HMRC can cancel the application and force you to reapply.
4. Check whether HMRC has issued an actual decision—a refusal, an EDR, a penalty. If it is only delay or questions, there is nothing to appeal yet.
5. Diarise the EDR and sort your invoicing—invoice gross now, reissue VAT invoices or a VAT-only adjustment once the number arrives.
6. Use the complaint route, then the Adjudicator, for pure delay—not the tribunal.
7. Get joined-up VAT and corporation-tax advice spanning both countries before you commit to any single account of where the business belongs.

Key Legislation And Resources

Legislation

• Section 3, VAT Act 1994—the company, not its director, is the "taxable person"
• Section 4, VAT Act 1994—a taxable supply is one "made in the United Kingdom"
• Section 7A, VAT Act 1994—place of supply of services (B2B follows the customer; B2C follows the supplier)
• Section 8, VAT Act 1994—the reverse charge on services from a non-established supplier to a UK business
• Section 9, VAT Act 1994—where a business "belongs": business and fixed establishment
• Schedule 1, VAT Act 1994—registration threshold (taxable supplies) and the paragraph 10 entitlement door
• Schedule 1A, VAT Act 1994—non-established taxable persons (nil threshold)
• Schedule 4A, VAT Act 1994—place-of-supply exceptions
• Section 83, VAT Act 1994—the exhaustive list of appealable VAT decisions (s.83(1)(a): registration)

Key Cases

• Salomon v A Salomon & Co Ltd [1897] AC 22 (HL)—a company is a legal person distinct from its members and directors
• Planzer Luxembourg Sàrl v Bundeszentralamt für Steuern (Case C-73/06)—a business is established where its essential management decisions are taken; a postal address is not enough
• Welmory sp z o.o. (Case C-605/12)—a fixed establishment needs sufficient permanence and human and technical resources
• HMRC v Secret Hotels2 Ltd [2014] UKSC 16—agent or principal turns on the contract construed in economic reality, not the label
• Airtours Holidays Transport Ltd v HMRC [2016] UKSC 21—who "receives" a supply turns on the contract; merely paying does not make you the recipient
• R (Glencore Energy UK Ltd) v HMRC [2017] EWCA Civ 1716—judicial review is the route for pure public-law challenges the statutory appeal cannot address
• HMRC v Hok Ltd [2012] UKUT 363 (TCC)—the FTT has no general judicial-review or fairness jurisdiction
• Autologic Holdings plc v IRC [2005] UKHL 54—use the statutory appeal route, not duplicative judicial review, where the tribunal can give the remedy

GOV.UK Guidance

• VAT Notice 700/1: who should register for VAT—establishment, NETPs, the reverse-charge carve-out (para 9.3), and the Companies House address route
• VAT Notice 741A: place of supply of services—the B2B/B2C general rule and "belonging"
• Register for VAT—the registration process, including for businesses not established in the UK
• Complain about HMRC—the route for delay and service grievances, leading to the Adjudicator's Office

On This Site

• When HMRC queries or delays your VAT registration—the procedural companion: the V5 letter, the verification questionnaires, the deadlines, and the delay remedies
• VAT penalties and appeals—late-registration penalties, the s.83/83G appeal mechanics, hardship and best judgment
• Postponing payment during appeal—why pay-first reaches assessments, not a registration appeal
• How to appeal to the tax tribunal—filing once an appealable decision exists
• Writing grounds of appeal—drafting grounds against a registration or EDR decision
• HMRC internal review—the optional review before you appeal
• Late appeal to the tax tribunal—if the 30 days window has passed
• Understanding HMRC appeal rights—the "is there an appealable decision?" framing
• What is a reasonable excuse—the defence to a failure-to-notify penalty
• Perrin v HMRC—the four-step reasonable-excuse test, and why ignorance of the law rarely succeeds alone
• Tax dispute timeline—where a registration dispute sits on the roadmap
• Online platform income and nudge letters—the same notification-trap shape for remote and platform businesses

This article is for informational purposes only and does not constitute legal or tax advice. For advice specific to your situation, consult a qualified tax adviser, accountant, or solicitor.