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Online Trading And Value Added Tax

It's a complicated area ...



With the rise of the internet, google etc many people in the UK are turning their hand to selling goods on the internet to private customers (treated as private individual, certain public bodies, certain small businesses unable to register for VAT and certain charities) and mail order ...

When your sales reach £85,000 you need to be registered for Value Added Tax!

When your sales reach £85,000 you need to be registered for Value Added Tax!

copyright: successphoto / 123rf stock photo

They soon find their sales figures hurtle towards the VAT threshold of £85,000 and begin to panic at the thought of VAT returns and falling cry of the UK VAT legislation. Thoughts of having to fill out VAT returns or falling foul of UK VAT legislation terrifies people so I thought it useful to review the rules for sales to private individuals from the UK.

  • Sales of goods to customers in the UK

    Subject UK domestic VAT, currently 20% (or possibly at the reduced 5% rate or zero-rate depending upon the nature of the goods) if registered or required to be registered for UK VAT. Remember in this instance sales to private customers within the EU count towards the UK VAT registration threshold. Also remember that once registered for UK VAT voluntarily or compulsorily, then UK VAT on business costs and on the purchase of the goods (if applicable) can be reclaimed subject to the normal rules governing the recovery of UK VAT.

  • Sales of goods to customers outside the EU

    Zero-rated provided they go to the customer outside the EU within three months of the date of the sale and the seller has the correct evidence of the goods leaving the UK.

  • Sales of goods to private customers in the EU

    Subject to UK VAT if registered for or required to be registered for UK VAT. There are no EC Sales Lists to be completed for these sales, but sales will require to be declared on UK VAT returns. However, each member state of the EU has a distance selling threshold and once the sales to any one member state exceed that threshold in a calendar year, the supplier needs to become registered for VAT (or the equivalent) there.

    For example in France the threshold is currently 35,000 Euros and in Germany 100,000 Euros. Once registered within another Member State the sales and VAT would need to be declared and paid in that country. In the UK you would still need to declare the sales figures (but not UK VAT) on a UK VAT return. Also, subject to the values with other Member States, there may be a requirement to complete an EU Intrastat Declaration within the UK, and or within other EU Member States should a VAT registration be required within other Member States. .

As you can see, Value Added Tax is a complex area and it's no wonder people are terrified of it!

Here at Essendon, we collaborate with a trusted VAT consultant to ensure our clients always have access to the best advice whether they're selling into the UK, the wider EU or beyond.

"Would you like to know more?"

If you'd like to find out more about Value Added Tax then do give me a call on 01908 774320 or click here to ping me an email and let's see how I can help you.

Until next time ...

Business Godparent

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More about Roger Eddowes ...

Roger trained at Edward Thomas Peirson & Sons in Market Harborough before working at Hartwell & Co, followed by Chancery, as a partner. He started Essendon Accounts and Tax with Helen Beaumont in 2014 as a general practitioner with a hands-on approach.

Roger loves getting his hands dirty, working with emerging, small-to-medium and family businesses to ensure they receive the best possible accountancy advice. Roger utilises an extensive network of business contacts to leverage the best guidance and practical solutions.