UK VAT and US sales tax for businesses selling across the Atlantic
Your first US order or UK subscriber can create a tax you are legally required to collect, even with no office there. We find out exactly where you owe UK VAT or US sales tax, register you only where you must, and file every return on both sides.
Free and no obligation. You get a written scope and fee before any work starts.
What the VAT and sales tax check covers
The five checks behind every registration and return.
- Nexus checkWhich states you owe US sales tax in, based on your sales and any stock or staff there.
- Product mapWhich of your products or services are taxable, and at what rate, in each state.
- UK VATHMRC registration, including for overseas businesses with no threshold.
- FilingState sales tax returns and Making Tax Digital VAT returns, prepared and filed.
- Past exposureVoluntary disclosure to US states or HMRC, so past tax is settled with less penalty.
When VAT or sales tax becomes your problem
These are the moments indirect tax usually catches businesses in the corridor out.
Your US orders are growing
You ship to customers in several states and have never registered for sales tax anywhere.
The risk: once a state threshold is passed, the tax you did not collect becomes your debt, with interest.
You have UK customers for software or digital content
Your subscriptions, apps or downloads are sold to UK consumers and no VAT is being charged.
The risk: UK VAT is due from the first sale, so past sales may already carry a liability.
You hold stock in the other country
You use a US fulfilment centre, a UK warehouse, or a marketplace that stores your goods.
The risk: stored stock can create a registration duty on its own, separate from your sales.
You invoice business clients across the border
You bill overseas companies and are not sure whether to charge VAT, sales tax or neither.
The risk: charging the wrong tax means credit notes, refunds and awkward conversations with clients.
Where do you owe VAT or sales tax?
Two quick questions. You will see which tax applies in the other country, what triggers registration and who collects it.
How the checker works: it covers the four sales patterns most common in the corridor. These are physical goods sold to consumers, digital services and software sold to consumers, services sold to other businesses, and goods sold through an online marketplace. For each, it shows whether UK VAT or US state sales tax is likely to apply in the destination country, what triggers registration and who collects the tax. For example, a UK online retailer selling to US shoppers usually owes no US tax until its sales into a state pass that state’s economic nexus threshold. At that point it registers and collects sales tax in that state.
What we do for you
Everything you need to collect the right tax in the right place, from the first check to ongoing returns.
Nexus study
A state by state review of your sales, transactions and any stock or staff in the US, showing where you have nexus today and where you are close.
Product taxability map
Which of your products or services are taxable in each state that matters to you, and at what rate.
UK VAT registration
Registration with HMRC, including for overseas businesses with no threshold, and the VAT scheme that suits how you trade.
State registrations and returns
Sales tax permits in the states where you must collect, then monthly, quarterly or annual returns filed on time.
Making Tax Digital VAT returns
UK VAT returns prepared and filed through MTD compatible software, with input VAT reclaimed correctly.
Past exposure clean up
Voluntary disclosure agreements with US states and disclosures to HMRC, so past tax is settled before it grows.
What clients say about our VAT and sales tax work
Registered in three states, back tax settled
We assumed a UK company owed nothing in the US. The nexus study showed we had passed the threshold in three states. Taxule registered us, settled the back tax through voluntary disclosure and now tracks every state each quarter.
Two years of UK VAT put right
Our UK subscribers had been paying no VAT because nobody told us overseas sellers have no threshold. Taxule handled the HMRC disclosure and set up our MTD returns, and the cost was far lower than we feared.
One team for both sides of the stock
We had no idea our US fulfilment centre stock could create nexus. Having one team explain the UK export side and the US state side together made it all make sense.
How we work with you
Three stages, handled by one team across both countries.
Map your exposure
We review your sales by country and state, your products and every channel you sell through, including marketplaces and fulfilment centres.
You get: a written map of where you owe VAT or sales tax now, and where you are close.
Register and clean up
We register you for UK VAT and in the states where you have nexus, and deal with any past exposure first.
You get: registrations in place and any back tax settled before it grows.
File and monitor
We file returns on both sides and check your sales against every threshold each quarter.
You get: returns filed on time and early warning before a new registration is needed.
Why one team for both taxes
Many businesses use a UK accountant for VAT and a separate US adviser for sales tax. This is what changes when one team covers both.
The VAT and sales tax rules behind your position
The rules that decide what you owe, explained in plain English.
VAT and sales tax are different taxes
UK VAT is charged at every stage of the supply chain and businesses reclaim what they pay. US sales tax is charged once, on the final sale. One never offsets the other.
VATA 1994Nexus no longer needs an office
In South Dakota v Wayfair, the US Supreme Court allowed states to require remote sellers to collect sales tax based on sales volume alone.
South Dakota v Wayfair, 2018The UK threshold is not for overseas sellers
UK businesses register once taxable turnover passes 90,000 pounds. A business established outside the UK has no threshold, so one taxable UK sale can be enough.
VATA 1994, Schedule 1AThe 135 pound rule
For goods sent to UK consumers in parcels of 135 pounds or less, the seller or marketplace charges VAT at the point of sale rather than at the border.
HMRC VAT Notice 143Business services follow the customer
For most business to business services, VAT is due where the customer belongs. That is why a US consultancy invoicing a UK company rarely needs a UK VAT number.
VATA 1994, section 7APast exposure grows quietly
Sales tax you did not collect is still owed by you, with interest and penalties. Voluntary disclosure usually limits how far back a state goes.
Your VAT and sales tax questions
Straight answers to what founders and finance teams ask us first.
Do I owe US sales tax if I have no office in the US?
Possibly. Since the Wayfair decision in 2018, states can require remote sellers to collect sales tax once their sales into the state pass an economic nexus threshold. We check each state that matters to you.
Does a US company need to register for UK VAT?
Often yes. A business established outside the UK has no VAT registration threshold, so it must register from its first taxable UK supply. This is common for US software businesses selling to UK consumers.
What is the UK VAT registration threshold?
For UK established businesses it is 90,000 pounds of taxable turnover in any rolling 12 month period. It does not apply to overseas businesses.
Is US sales tax one rate across the country?
No. There is no federal sales tax. Each state sets its own rate, often with county and city rates on top, and what is taxable differs between states.
What happens if I should already be registered?
The past tax is still owed, with interest and possibly penalties. A voluntary disclosure to the state or HMRC usually reduces penalties and limits how far back the tax is assessed.
How much does VAT and sales tax support cost?
It depends on how many states and returns are involved. After the free consultation, we agree the scope and fee with you in writing before any work starts.
Find out where you owe before a state or HMRC tells you.
Tell us where and what you sell. We will map your VAT and sales tax position on both sides and show you what needs doing first.
