VAT Threshold and providing services for overseas businesses

I have not yet met the VAT Threshold but I am getting close. Recently a US company asked me to provide services for them. It is my understanding that this would be Out Of Scope for UK VAT. Does that mean it does not count towards the VAT Threshold? If this is the case, how would I deal with this in my accounts so that the threshold does not get triggered? My accounting software FreeAgent does not allow me to mark sales as Out of Scope when I am not VAT Registered.

Hi Claire B,

If you are providing services to a customer based outside the UK then these sales would be classed as being Outside the Scope Of UK Vat and so would not go towards your turnover when considering the need to register for VAT.
Please see the guidance below;
6. The place of supply rules for services
I would recommend speaking to the software provider regarding how this is accounted for as we can't advise on this.

Thank you.

The question and answer refers to services would the answr be the same if it is a supply of goods rather than the provision of services?

Hi,

If you are supplying goods overseas then they would not be outside of the scope of VAT like provision of services are. The supply would be classed as a zero rated export and would go towards your taxable supplies.

However, if you only make zero rated sales or the majority of your sales are zero rated then you can apply for an exemption to registration. Please see section 3.11 of the guidance here:

Working out whether you need to register

Thank you.

Hi, If I sell products (posters and prints) abroad and the products are made and dispatched outside of the UK do I need to count these sales towards my total turnover for VAT purposes? Many thanks

Hi Mike,
There is only a requirement to register for VAT if your taxable turnover breaches the current £90K threshold.
If you sell goods overseas and these goods are never in the UK then these supplies will be Outside The Scope of UK VAT and will therefore not go towards your turnover for VAT Registration purposes.
Thank you.

Hi, I am self employed and provide a service B2B for a company in Germany and I understand this to be outside the scope of UK VAT. These services are the sole source of income (no UK customers). I was previously advised on a different forum not connected with HMRC that as this income was over the VAT threshold, even though outside the scope of UK VAT, I was required to register for VAT which I have done. I duly complete my returns with nothing to pay from my accounting software. Was the advice possibly in error ? If it was can I unregister from VAT to simplify my accounting? Will this cause any issue when submitting my Self Assessment as the business income will be over £90,000. Thank you

Hi,
It does depend what kind of service you are supplying to the company overseas.
If you supply a general rule service then your supplies will be outside the scope and there would be no requirement to register for VAT or stay registered for VAT. You can see the guidance below:
The place of supply rules for services
If this is the case then you can cancel your VAT registration. Please see the guidance below:
Cancel your registration
Thank you.

Hi, I am a sole trader and due to begin a contract for services for a German company soon. I am a UK citizen and will supply the services within the UK, but I will invoice the German company for my services. They are VAT registered in Germany and have asked me to state “Reverse Charges” on my invoice. I understand this and the reasons for this, however, they have asked me to include my VAT number alongside theirs on the invoice. I’m not VAT registered and don’t intend to be any time soon as my turnover is well below the VAT threshold in the UK. Is this a mistake on their part? Or do I need to be VAT registered? Thank you ☺️

Hi Shelley,
You would only need to register for VAT in the UK if you are making taxable supplies over the Registration threshold.
Please see the guidance below:
3. Working out whether you need to register.
Thank you.

Thanks great, thank you 🤩

Hi, I'm a sole trader (wedding videographer) can I please ask some advise as depending on which accountant I speak with I get varying answers. I'm not VAT registered and I keep myself below the VAT theshold. My question is if I film a wedding abroad and complete all work outside of the UK does this income count towards the VAT threshold, because as far as I can see its outside the scope for UK VAT? Does it also make any difference for couples from outside of the UK getting married abroad? Thank you in advance. Sam

Hi sammoss1991,
Please see the following guidance:
12. B2C services of a professional, technical, financial, intellectual or other intangible nature supplied to customers outside the UK
If you meet this particular guidance then the Place of Supply will be where the customer belongs and not where the service takes place.
Thank you.

Hello, I can see a lot of other similar posts on here, so sorry if this is just a repeat but I want to be certain for my situation. I am self employed (sole trader) and provide B2B services. I am only supplying clients located in Australia. Do I need to register for VAT if my income goes over 90k, if all of this income is from my Australian clients? Thanks,

Hi,
If you are making supplies to business customers overseas then the nature of the supplies will determine whether you need to register for VAT in the UK. If you are supplying services under the 'General Rule' then your supplies will be outside the Ssope of UK VAT and there will be no requirement to register for VAT. Yu can see guidance here:
The place of supply rules for services
However, if you are supplying other types of services where the place of supply is in the UK, then there will be a requirement to register for VAT if your turnover goes over £90000. Pease see section 7-10 of the guidance below:
Land related services
Working out whether you need to register
Thank you.

Hello, I have been asked by a non UK-based company to sell their merchandise in a couple of pop-up events. I will be supplying the service of selling on their behalf and I charge a commission on the gross. Is this commission Out-of-Scope? Thanks!

Hi, apologies if my question has already been answered but I just want to double check my situation. I have an e-commerce business which I source my products from china. I currently hold stock in the UK and ship to customers in the UK and the USA. Current turnover is at £90k a year. Revenue is roughly 50/50 split from UK and USA. I basically don’t want to go VAT registered as my profit margins will go from 20% to roughly 0. But I want to grow my business. If I keep my UK revenue under £90k, will I be able to stay away from being VAT registered? Or does the USA revenue count towards VAT threshold. If the answer is USA sales count towards VAT threshold because I ship from UK. What if I get stock sent from china directly to USA warehouse? Thanks!

Hi supermaca,
If you are charging commission on a sale of goods to an overseas business then you can see the guidance here:
Intermediary services
Thank you.

Hi Charlie shailer,
If the goods are in the UK and you supply goods to UK customers and US customers then both will be considered taxable supplies and will count towards your taxable turnover.
The sales to US customers are zero rated exports but they are still taxable supplies.
If you arrange goods to be sold from outside the UK to a USA warehouse then this will be outside the scope of UK VAT as the goods are never in the UK. You can see guidance here:
Working out whether you need to register
Thank you.

Hello, Thanks for the clear answers! Same question as Charlie Shailer above regarding UK/US supplies counting towards the VAT threshold but with the caveat; does this extend to overseas sales through an online Market place such as ETSY? I read somewhere that if an OMP sales platform was liable to account for the VAT then these supples wouldn't count towards the taxable turnover. Many thanks in advance Geoff