If your company is based outside the United Kingdom but registered for VAT in the UK, you are required to submit UK VAT returns to HMRC. This is one of the most important ongoing compliance obligations for overseas companies trading with the UK. From my experience working with international businesses for more than 20 years, many foreign companies underestimate how important VAT returns are and how strict HMRC can be with deadlines and reporting requirements.
In this guide, I will explain how UK VAT returns for overseas companies work, what information is required, how often returns must be submitted, and what mistakes non-UK businesses should avoid.
Do Overseas Companies Need to File UK VAT Returns?
Yes, if your overseas company is registered for VAT in the UK, you must submit VAT returns to HMRC, even if you have no sales or no VAT to pay.
Overseas companies typically register for UK VAT if they:
- Sell goods to customers in the UK
- Store goods in the UK (for example Amazon FBA)
- Import goods into the UK
- Sell through marketplaces like Amazon, eBay, Shopify
- Exceed the UK distance selling thresholds (in some cases)
- Provide certain services in the UK
- Want to reclaim UK import VAT
Once your company receives a UK VAT number, HMRC expects VAT returns to be submitted regularly.
This is very important:
Even if your company has no activity, you still must submit a NIL VAT return.
Many overseas companies receive penalties simply because they think no activity means no reporting. That is not correct.
What Is a UK VAT Return?
A UK VAT return is a report that shows HMRC how much VAT your company charged (output VAT) and how much VAT your company paid (input VAT).
The VAT return includes:
- Total sales
- Total purchases
- Output VAT (VAT you charged customers)
- Input VAT (VAT you paid on purchases and imports)
- VAT payable to HMRC or VAT refundable from HMRC
The UK VAT return is submitted electronically under the Making Tax Digital (MTD) system.
At the end of the VAT period, there are three possible outcomes:
- You owe VAT to HMRC
- HMRC owes you a VAT refund
- Nothing to pay (NIL return)
How Often Do Overseas Companies Submit UK VAT Returns?
Most overseas companies submit VAT returns quarterly. This means four VAT returns per year.
Typical VAT quarters look like this:
- January – March
- April – June
- July – September
- October – December
However, some overseas companies submit monthly VAT returns, especially if:
- They import goods into the UK
- They regularly reclaim import VAT
- They receive VAT refunds
Monthly VAT returns allow companies to recover VAT faster.
The Annual Accounting Scheme is rarely used by overseas companies and is generally more suitable for UK-based businesses.
What Information Is Needed to Prepare a UK VAT Return?
To prepare accurate UK VAT returns for overseas companies, the accountant usually needs the following documents:
Sales Documents:
- Sales invoices
- Amazon sales reports
- Shopify reports
- eBay reports
- Stripe / PayPal reports
- Other marketplace reports
Purchase Documents:
- Supplier invoices
- UK expense invoices
- Professional services invoices
- Shipping invoices
- Warehouse invoices
Import Documents:
- C79 Import VAT Certificates
- Import documents from freight agents
- Customs documents
Financial Documents:
- Bank statements
- Payment processor statements
In practice, most overseas companies simply provide:
- Sales reports
- Purchase invoices
- Import VAT certificates
- Bank statements
That is usually enough to prepare the VAT return.
How to Submit a UK VAT Return to HMRC
All UK VAT returns must be submitted under Making Tax Digital (MTD). This means VAT returns must be filed using compatible accounting software.
The process works like this:
- Collect all sales and purchase data
- Calculate output VAT and input VAT
- Prepare VAT return
- Submit VAT return via MTD software
- Pay VAT to HMRC (if VAT is due)
VAT Return Deadline
The VAT return and payment are due 1 month and 7 days after the end of the VAT period.
Example:
- VAT period ends: 31 March
- VAT return deadline: 7 May
- VAT payment deadline: 7 May
Both the return and the payment must be done by this date.
UK VAT Return Deadlines and Penalties
HMRC has become much stricter in recent years, especially with overseas companies.
There are penalties for:
- Late VAT return submission
- Late VAT payment
- Incorrect VAT returns
HMRC now uses a penalty points system:
- Each late VAT return = 1 penalty point
- When you reach a certain number of points, you receive a fine
- Late payment also results in penalties and interest
From practical experience, the most common problem is not that companies don’t want to pay VAT, but that they simply forget deadlines. HMRC does not accept this as an excuse.
Can Overseas Companies Reclaim VAT?
Yes, overseas companies can reclaim VAT in the UK if they are VAT registered and have valid VAT invoices.
You can usually reclaim:
- Import VAT (very common)
- UK supplier VAT
- Warehouse costs
- Shipping within the UK
- Accountant fees
- Professional services
- Office expenses in the UK
However, to reclaim VAT you must have:
- Valid VAT invoice
- Supplier VAT number
- Correct company details
- The expense must be for business purposes
Import VAT is often the biggest VAT reclaim for overseas ecommerce companies.
Common Mistakes Overseas Companies Make
Over the years, I have seen the same mistakes again and again.
Most common mistakes:
- Not registering for VAT on time
- Not submitting VAT returns because there were no sales
- Reclaiming VAT without valid invoices
- Using wrong exchange rates
- Not reclaiming import VAT
- Submitting VAT returns late
- Poor bookkeeping
- Not keeping proper records
These mistakes can lead to penalties, VAT inspections, and problems with HMRC.
Do You Need an Accountant for UK VAT Returns?
Legally, you can submit VAT returns yourself. But in practice, most overseas companies use an accountant.
Why?
Because UK VAT rules are complicated, especially for:
- Amazon sellers
- Importers
- Dropshipping companies
- SaaS companies
- International ecommerce
A good accountant does not just submit VAT returns. They also:
- Check VAT calculations
- Make sure VAT is reclaimed correctly
- Help avoid penalties
- Communicate with HMRC
- Help with VAT inspections
- Ensure compliance
This is not about avoiding tax. This is about correct reporting and legal tax optimisation.
Summary
UK VAT returns for overseas companies are a mandatory requirement if your company is VAT registered in the UK. Returns must be submitted regularly, usually every quarter, and must include sales, purchases, output VAT, and input VAT.
Even if your overseas company has no activity, you still must submit VAT returns. Missing deadlines can result in penalties, interest, and problems with HMRC.
In simple terms, overseas companies must:
- Register for UK VAT when required
- Keep proper records
- Submit VAT returns on time
- Pay VAT on time
- Reclaim VAT correctly
- Keep documents for at least 6 years
If everything is done correctly, UK VAT is not a problem. But if ignored, it can become a serious issue very quickly.
FAQ — UK VAT Returns for Overseas Companies
Do I need to file VAT returns if I have no sales?
Yes. You must submit a NIL VAT return even if there is no activity.
Can I submit UK VAT returns myself?
Yes, but you must use MTD-compatible software and understand UK VAT rules.
How much does UK VAT return cost?
It depends on the number of transactions, but overseas companies typically pay an accountant a fixed quarterly fee.
Can I reclaim import VAT?
Yes, if your company is VAT registered and you have C79 certificates.
What happens if I submit VAT returns late?
HMRC will issue penalty points, fines, and interest on late payments.
How long must I keep VAT records?
At least 6 years.
