HMRC internal manual

VAT Registration

VATREG37050 - Non-established taxable persons (NETPs): introduction

The UK historically allowed its domestic VAT registration threshold to apply to non-established taxable persons (NETPs) who make taxable supplies in the UK. NETPs include, for example, non-UK traders at farmers’ markets and Irish service suppliers working across the land border. However, a decision (Schmelz C-97/09) in the CJEU (the European Court of Justice) confirmed that only businesses established in a Member State can benefit from its domestic VAT registration threshold.

Ms Schmelz was a German national who rented out a flat in Austria. Her rental income from the flat placed her below the Austrian registration threshold and she did not wish to register there voluntarily. But the CJEU ruled that, because she was not established in Austria, she must register for VAT there despite trading below its registration threshold.

A new Schedule 1A to the VAT Act 1994 and other consequential changes were made in Finance Act 2012 and came into force on 1 December 2012.

The UK domestic registration threshold does not apply to NETPs. NETPs are required to register from the earliest of the date that

  • they make, or
  • they expect to make

taxable supplies of any value in the UK.