UK Tax Representatives – the current VAT regime

If you’re a Non Established Taxable Person making taxable supplies in the UK, you may be required to appoint a tax representative.

NETP

A Non-Established Taxable Person (NETP) is any person who isn’t normally resident in the UK, doesn’t have a UK establishment and, in the case of a company, isn’t incorporated in the UK.

UK Establishment

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
  • The business has a permanent physical presence with the human and technical resources to make or receive taxable supplies in the UK

HMRC 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.
But clearly only an NETP making taxable supplies in the UK is required to obtain a UK VAT ID, and we are happy to provide advice on this.

Tax Representative

A tax representative:

  • must keep your VAT records and accounts and account for UK VAT on your behalf
  • is jointly and severally liable for any VAT debts you incur

You may only appoint one person at a time to act on your behalf, although a tax representative may act for more than one principal at any time.

For each principal a tax representative represents, they must:

  • keep separate VAT accounts
  • make separate VAT returns

Tax representatives – what you must do if you appoint one

When you register for VAT online, you will be asked for information about your tax representative. You’ll need to give your representative enough information to allow them to:

  • keep a VAT account
  • make returns
  • pay VAT

on your behalf.

When HMRC can make you appoint a tax representative

HMRC can direct some NETPs to appoint a tax representative who:

  • must be based in the UK
  • must be fit and proper

HMRC can’t direct NETPs who are established in other EU member states, or who are based in countries where certain mutual assistance arrangements exist. However, that is likely to change following Brexit, especially if the UK Government continues to seek to leave both the Single Market and the Customs Union at the end of March 2019. We await more clarity on this point – indeed, we await more clarity on Brexit per se!

What makes a tax representative fit and proper?

A tax representative must meet or exceed a particular level of suitability, compliance and integrity in how they conduct, or appear likely to conduct, their tax affairs with HMRC.
In determining whether a particular individual is a fit and proper person to act as a VAT representative for an NETP, HMRC will use the following criteria.

A person may not be accepted if they:

  • have been disqualified as a Director under Company Law
  • are or have been involved in crime and or have relevant criminal convictions
  • have had previous requests for a similar role in VAT or any other tax or duty regime revoked or refused
  • have personally received penalties for deliberate wrongdoing
  • have any connection with the business they wish to represent, or with key persons involved in that business, or with any non-compliant or fraudulent businesses

Where HMRC becomes aware of information that suggests a person may not be a fit and proper person, HMRC may refuse to register them as a tax representative.
Covertax Chartered Tax Advisers, and their sister companies, Scott Botham Chartered Tax Advisers and RyTax are all fit and proper under these rules, and we intend to stay that way!

What if the tax representative I have appointed is not fit and proper?

Where HMRC has reason to believe that a tax representative may not be fit and proper, HMRC may cancel their registration as a tax representative.
If HMRC has directed you to appoint a tax representative, you’ll need to appoint a new representative who is fit and proper.

When you can appoint an agent instead of a tax representative

Covertax Chartered Tax Advisers and our sister company Scott Botham Chartered Tax Advisers already act as UK VAT Agent for many businesses.

As long as HMRC has not directed you to appoint a tax representative, you can appoint an agent to deal with your UK VAT affairs. Any arrangement you make will be subject to whatever contractual agreement you and your agent decide. We can’t hold your agent responsible for any of your VAT debts. We reserve the right not to deal with any particular agent you may choose to appoint. In some circumstances, if we think it’s necessary, we may still insist that you appoint a tax representative. We have a standard form of words which HMRC finds acceptable for our appointment as UK VAT Agent.

As with the appointment of tax representatives:

  • you may only appoint one person at a time to act as your agent (although an agent may act for more than one principal – which, of course, we do)
  • you must still fill in the appropriate form to apply for registration
  • we’ll need your authority before we can deal with your agent – in the case of agents, the authority should be in a letter. We hold a suitable draft. Please note despite the legal status of this authority, HMRC in practice still requires the agent to hold a 64-8 agent authority as well.
  • you’ll need to give us enough information to allow us to keep your VAT account, make your returns and pay VAT on your behalf. We have a standard data capture form which we currently use, and it also captures the information we need for ESL and Intrastat. With the advent of Making Tax Digital (“MTD”) we are sourcing an online accounting package to meet those new requirements

Summary

There is no doubt that these important changes have passed many people by.
With Brexit we expect there will be more issues, although right now all we can do is to plan for the worst and hope for the best.

In theory all of our EU VAT return clients will need to appoint a UK tax representative and we will offer that opportunity to them. Similarly other EU businesses may well find that they have new responsibilities to register for VAT in the UK, following the removal of Single Market VAT simplifications and we are here to help with those needs.

If you have any queries, please email steve.botham@covertax.co.uk