UK Established business - for VAT purposes: Question

Hello, If one has a UK-based Incorporation that manages an e-commerce business with a foreign director, and they have a registered business address in the UK that is a virtual office with Companies House (correspondence address). But, the same company also pays to rent a permanent physical industrial unit, as a warehouse/supply chain operation, with a self-employed contractor who works and invoices them ad-hoc hours to manage their business and supply chain from this unit regularly. So, it "has the human and technical resources" to make and receive deliveries as well as physical collections from there under the company. Then how does HMRC treat such business in their books? UK Established business, or NETP? I have read the thread on "9. Non-established-taxable-persons (NETPs) — basic information". But feel I need a direct answer to this, as although the company correspondence address registered with companies house is a virtual one for mail and provides a more prestigious address on paper, the fact the company operates from a monthly rented unit domestically would mean to me it has a UK established presence? Please can you help confirm, thank you.

Is anyone able to answer?

Hi,

A UK establishment exists if either the:

• place where essential management decisions are made and the business’s central administration is carried out is in the UK
• business has a permanent physical presence with the human and technical resources to make or receive taxable supplies in the UK

We would normally consider a company which is incorporated in the UK to have an establishment in the UK as long as it’s able to receive business supplies at its registered office.

Thank you.

HMRC are not likely to provide an answer to a specific set of circumstances. You may also find it useful to consider how HMRC interpret the principal place of business PPOB which is needed for a VAT registration for a UK established business. Normally, the PPOB is the place where orders are received and dealt with and the day to day running of the business takes place. An accountants office , registered office or private address would not normally be considered a PPOB The PPOB is usually where HMRC expect to be able to examine the VAT records, and there should be someone at the premises that is responsible for the company’s VAT affairs, although there can be exceptions to this . If there isn’t sufficient evidence that there is a physical premises in the UK where the business is operating from but instead the business is effectively run from overseas then this is likely to be considered a NETP for VAT purposes. The rules for registration of a business with companies house by overseas directors , permanent establishment for tax, and business establishments for VAT and customs are all slightly different. It is probably best if you seek some professional advice on the specific circumstances you have described.

Thanks, That is very helpful. It is certainly confusing. As the guideline states: "We would normally consider a company which is incorporated in the UK to have an establishment in the UK as long as it’s able to receive business supplies at its registered office." Well, that, to me, is met, as supplies are received at all times, but just not directly all the time at the 'registered office', as the main operational hub for work is a logistics unit that deals with more than just small admin office duties, because of the large inventory involved. A registered office just helps enable a more prestigious capital address to show off with correspondence. My confusion is that It would seem very unjust to not count that as a UK-based established business as the physical rent on it costs far more than the city address, and has regular supplies in and work via it all the time requiring physical human handling. Thus, (to me anyway), should meet the point "A UK establishment exists if the: business has a permanent physical presence with the human and technical resources to make or receive taxable supplies in the UK" But if the authorities are unable to answer it directly, then how can it be determined, as It then just becomes a vague point we have to decipher? Thank you.

based on "A UK establishment exists if a business has a permanent physical presence with the human and technical resources to make or receive taxable supplies in the UK" and I sell only true amazon FBA using my uk ltd and Amazon can receive our supplies duty paid by UPS (DDP) coming from china is this making a UK establishment for my company even if i live abroad as director (owner)

When I said HMRC are not likely to provide an answer to a specific set of circumstances. I should have clarified that they cannot provide an answer to a specific set of circumstances on this forum. I simply quoted additional HMRC guidelines on what they look for when a business is registering for VAT and therefore what they need to consider that the business is operating in the UK . Usually a place of business isn’t difficult to determine , however where there are solely overseas directors of a UK incorporated company and no direct uk employees of the company it becomes more complex and subject to additional consideration. https://www.gov.uk/government/publications/vat-notice-7001-should-i-be-registered-for-vat/vat-notice-7001-should-i-be-registered-for-vat

Hi Kahlid Sajid,

You would need to make the decision regarding whether you business is a UK established one or a non established one.

Who should register for VAT (VAT Notice 700/1)

Thank you.