HMRC internal manual

VAT Registration

VATREG23450 - Voluntary registrations: persons who do not make or intend to make taxable supplies in the UK: deduction of input tax by businesses in the financial sector

VATREG23150 sets out circumstances in which a trader can register in the UK to reclaim input tax in respect of supplies made outside the EU. UK businesses will often encounter problems in determining whether or not supplies made by overseas offices are received by persons belonging outside the UK.


  • for the purpose of determining input tax recovery only, and
  • where the identity of the customer and, therefore, their location is not known

the customer’s notional location may be determined by reference to the location of the supplier’s establishment most closely associated with the supply.

If the supply is made:

  • by a head office/branch outside the EU, it is treated as if it were received outside the EU
  • by a head office/branch inside the EU, it is treated as if it were received within the EU.

You may use this rule for determining input tax deductibility except where there is information available that indicates that its use will conflict with the basic legal principles set out in VATREG23200. For example, a London representative office of a Swiss bank incurs input tax in the UK in connection with supplies made by the Bank of Switzerland. Since the supply is made in a country outside the EU, it would be treated as if it were received outside the EU under the above rule. However if there is evidence, for example on the supplier’s invoice, that the supply was being made to a recipient in another EU country, you must disallow input tax deduction.

For further assistance in this area refer to the PE Manual. (External users can find the guidance at