United Kingdom: Reverse Charge VAT Applies Only to Registered Businesses

• From 1 April 2027, the UK VAT reverse charge on overseas services will apply only where the customer is VAT registered in the UK.
• If a business customer is not VAT registered, the overseas supplier must charge UK VAT and account for it to HMRC.
• This changes current rules under section 8 VATA 1994, which can currently leave some overseas service purchases outside VAT for unregistered businesses.
• The measure is intended to remove a tax advantage for using overseas suppliers over UK suppliers and to simplify VAT treatment for small platform-based businesses below the VAT threshold.
• HMRC expects the measure to raise £70m in 2027-28 and £75m per year from 2028-29 onward.

Source: gov.uk

Note that this post was (partially) written with the help of AI. It is always useful to review the original source material, and where needed to obtain (local) advice from a specialist.

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