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HMRC internal manual

International Manual

HM Revenue & Customs
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Non-residents trading in the UK: making of contract


It is quite common to find that there is no formal acceptance of the offer by the person supplying the goods and, in that situation, delivery itself will normally constitute acceptance; and then it would be important to look at the place of delivery, the place where the lawful property in the goods passes from seller to buyer. Similarly, in the context of a service trade, actual performance of the services normally constitutes acceptance.

One possibility to bear in mind is that there could be a contract made in the UK, but this may not in fact amount to the exercise of a trade in the UK. For example, if a non-resident trader advertises goods for sale in a UK trade magazine and a customer responds by telephone to the non-resident during which agreement is reached or there is an exchange of emails, the contract would technically be made in the UK. But the non- resident’s actions would not amount to trading in the UK.

There may be similar doubt when sales are to people who are not resident here. The problem can be illustrated by a simple example. A New York art dealer has a picture that a Frenchman is interested in. The American and the Frenchman happen to meet in London which both are visiting for a few days holiday. In their hotel they agree on a price for the picture and conclude the deal. The contract is made in the UK. Is the American trading in the UK? The answer to that question will depend upon the surrounding facts and circumstances of the American art dealer’s trade. If he habitually concluded transactions in this manner then that would be supportive of the view that this transaction was but one out of his usual conduct of trade. One may devise improbable examples of this kind without doing more than to highlight the difficulties which absolute reliance on the place of contract as a test would involve. Other cases of difficulty are those where there is reason to believe that, although contracts are formally made abroad, everything is really done here short of signing a piece of paper. In such cases we would say that there is trading here. The problem in such a case is largely one of proof.

Price lists

The mere sending out of price lists and advertisements does not constitute an offer, it is rather an open invitation for offers to be made. An offer must be quite specific and a price list is not an offer to supply an unlimited amount of goods at the price named. It follows that when a customer buys goods from a supplier the customer makes the offer and the supplier notifies acceptance. That is generally the assumption in cases where place of contract has been decisive in determining a non-resident’s liability. But it is not impossible for a price list to amount to an offer, as long as the list details the price, the quantity and gives a definite description of the goods concerned. If in such circumstances the buyer were to put in some amendment not contained in the original offer, then what the buyer does becomes a fresh offer and one which has to be unconditionally accepted before there can be said to be a binding contract. And there may be a series of communications between customer and supplier so that it is a matter of chance as to who makes and who accepts the final offer.

Acceptance by an agent on behalf of non-resident

In the UK, under common law, we interpret any actions carried out by an agent as having been performed for the principal and binding the principal in the same way as though they had carried out those actions themselves. For example, a contract arranged by an agent in the UK to deliver goods owned by a foreign principal to a customer would be treated for UK tax purposes as though the foreign principal themselves had contracted in the UK for the delivery. This is the case, regardless of whose name the contract with the customer is made or written in. This differs from the legal position under civil law, which is detailed in the guidance at INTM266160.

In some cases, it will be evident that the non-resident’s trade is substantially being carried out in the UK; possibly because there are UK customers with whom relationships are being serviced and managed in the UK and possibly because it is not immediately obvious that anything by way of trade occurs anywhere else other than the UK. But it may not always be a simple matter to ascertain whether the sales or other business in the UK has come about because an agent has made contracts with the customers in the UK. Some helpful pointers can be gained from the case of CIR v Brackett (60TC124) which is detailed at INTM264110. Where the matter of whether an agent has made contracts for a principal becomes a material point it is very important to establish the facts regarding how the economic activity in the UK has been carried out. Further advice can be taken from CTIAA Business International.


A website proffering goods for sale amounts to an ‘invitation to treat’ in relation to those goods.

When a customer places an order for a particular item on the website, this will constitute an ‘offer’ to purchase the item.

The question is how, when and where the acceptance of the customer’s offer is to be regarded as having crystallised.

  1. In JSC Zestafoni Nikoladze Ferroalloy Plant v Ronly Holdings Ltd [2004] Colman J held that an acceptance by fax constituted an “instantaneous communication”. The fax took effect on receipt as the sender’s machine would generally indicate whether the message had been received “effectively” (as opposed to having been received only in part). Accordingly it would seem that an e-mail acceptance should also be regarded as an instantaneous communication.
  2. There are therefore two potential times when acceptance crystallises:



  1. the more likely option is that it occurs once the customer makes payment online and is presented with an order acknowledgment page; and
  2. alternatively the latest stage when it might occur is when the order confirmation email is sent out.

In either case, there is a good argument that the place of contract is the UK.

  1. An offer can be accepted not only by a written acceptance, but also by conduct. (See Chitty on Contracts Vol.1 (29th ed) para. 2-028) Ordinarily, accepting payment for goods is a classic example of acceptance of an offer to purchase the goods.
  2. The order acknowledgment web-page would seem to be a communication of the vendor’s acceptance of the customer’s offer to purchase. The contract is probably, therefore, concluded in the UK once the customer there sees this web-page.
  3. The very latest time when the contract can be concluded is when the vendor issues an e-mail confirming the order. An e-mail acceptance should be regarded as an instantaneous communication, in the same way that a fax communication is regarded as instantaneous, i.e. it is effective upon receipt by the offeror.
  4. In effect the sale is concluded when the payment is accepted, when the order is acknowledged on-screen, or when the purchaser receives the order confirmation e-mail. The contract is concluded in the UK at that time, and the postal rule does not apply.
  5. This is not affected by any terms on the vendor’s web-site reserving the right to refuse to supply for any reason. Such terms are not binding until a binding contract is formed between the parties. The right to refuse to supply (insofar as it is reasonable) and the right to cancel only make sense if the vendor is under an obligation to deliver. If there is no contract and the vendor is under no obligation to deliver, there is nothing to cancel and no useful purpose to the right to refuse to deliver.