The tax regime has sparked numerous discussions from foreign companies doing business in the UK. Among these concerns, fiscal representative caught significant attention since this method has long been adopted to oil the wheels for non-residents who seek to conduct importing/exporting activities in the UK.
But the benefit of having this individual on board goes beyond just regulatory compliance, considering how vastly different each member’s customs protocol and VAT regulations can be.
So what exactly does this approach entail? What changes have been made to this method following Brexit? How can your business appoint a fiscal representative?
If you are still finding the topic puzzling, follow through with our article!
Fiscal representative in the UK explained
What is a fiscal representative?
A fiscal representative (FR) in the UK is a local company that represents overseas companies for VAT purposes because the company must register for VAT but cannot do so on its own.
As a general rule, a business conducting VAT-related transactions in the UK is obliged to register for VAT purposes. The following are some usual examples of VAT-related transactions for foreign businesses:
- A supply of goods located in the UK where the reverse charge does not apply
- A supply of services not reverse charged
- The import of goods into the UK
- The export of goods or products to countries outside of the EU
- A supply of goods sold online when the goods are in the UK at the point of sale (e.g., goods are stored in UK warehouses)
Who must appoint a Fiscal Representative in the UK?
Non-UK companies from countries with which the UK does not have Tax Information Exchange Agreements (TIEAs) may be required to appoint a fiscal representative when registering in the UK.
In most cases, a non-UK company can deal with VAT without the assistance of a third party. However, it must meet the requirements below:
- Register for VAT at the appropriate time
- Maintain a record of everything it buys and sells in the UK
- Maintain all records required to complete a VAT Return
- Provide HMRC with records and accounts for inspection
- Keep track of all VAT paid and charged for each reporting period
- Pay correct amount of tax in a timely manner
Non-UK companies wishing to conduct importing/exporting activities in the UK as a part of their trade must comply with the nation’s strict and thorough tax declaration process.
Non-Established Taxable Person (NETP)
Overseas businesses with no place of business in the UK, known as a Non-Established Taxable Person (NETP), may also need to appoint fiscal representatives.
If your business is a NETP, you may appoint a tax representative who:
- must maintain principal’s VAT records and accounts, as well as account for UK VAT on your behalf
- is jointly and severally liable for any VAT debts incurred by your business
A NETP is required to provide all information necessary to fulfill its obligations.
Advantages of appointing a fiscal representative
Some of the advantages you may want to consider include:
- Reduce confusion and time spent on VAT registration.
- Access to tax-related knowledge and hands-on experience
- Ensure that the company’s VAT records are transparent and clear
- Eliminate upfront VAT payment when importing as VAT is transferred to the fiscal representative, lowering your cash flow burden
How does fiscal representative work?
The work process of a fiscal representative might vary and depend on your specific needs, but the general workflow is as follows:
- Learn about the company
An appointed fiscal representative will take time to learn about your company. For instance, the products or services you provide, your target market, the scope of business, and so on.
- Analyze your VAT obligations
This includes the analysis of your flows and compliance with VAT, invoices, customs, bookkeeping, etc.
- Register VAT and submit VAT returns
The FR will assist your business in processing VAT registration, as well as filing for VAT returns with HMRC.
The role that fiscal representative plays in the UK
In general, the FR is responsible for the proper calculation and reporting of VAT and serves as the point of contact for local tax authorities in the event of questions or audits. If your company has unpaid or undeclared VAT, the FR will be held jointly responsible for the debt.
When the VAT threshold is reached, your fiscal representative will handle everything on your behalf. Remember, the border processing chain is only as strong as its weakest link: If you have problems with cross-border operations, the FR will manage all relevant topics and procedures. He/she will also handle files and administrative documents and inform you of any regulatory changes that may affect your company.
The fiscal representative is also bound by the local tax authorities in order to deliver smooth collaborations between tax agents and your company:
- Check that your company is properly registered with the local tax authority
- Ensure that you are adhering to the standards for invoicing, VAT treatment, exchange rates, and so on
- Maintain accounting records that meet stringent local requirements and are easily accessible to tax authorities
- Prepare and submit all VAT and related files correctly
- Professionally handle VAT office inquiries and tax audits
Do UK companies have to appoint a fiscal representative?
If you’ve already registered a UK company, you’re not required to have a fiscal representative to conduct activities domestically. But if you wish to do business with other European countries, things will work differently.
There are certain nations within the EU that currently mandate a fiscal representative for UK businesses due to the implementation of Corporate Tax Implications for EU-UK Trading Relationships. As such, companies will need to appoint an FR who is a resident of European countries to handle their VAT and tax-related matters.
A list of EU countries requires UK businesses to appoint a fiscal representative:
Companies registered in the UK should keep in mind these countries so that they can appoint a fiscal representative in time for trading activities to be carried out seamlessly.
If you are seeking to appoint a fiscal representative in the UK, you can fill out this online VAT1TR form.
In the case where you wish to get access to a full package of everything tax-related, from getting fiscal advice to hiring and collaborating with your fiscal representative in the UK, don’t hesitate to contact our team for a streamlined experience.
Frequently Asked Questions
When will my business need a fiscal representative?
Your business will be asked to recruit a fiscal representative if your company is a foreign firm seeking to conduct trading activities (both import and export) at the border of the UK.
Why is fiscal representation vital for global business?
A fiscal representative is in charge of planning and executing any tax-related administrative process for your business following the UK standards. They will also be responsible for maintaining clear and accurate communications between your company and the local authority to ensure that your trading activities can be conducted in a lawful manner.
In addition, they will have the liability to resolve any problems that arise regarding VAT or taxation throughout your trading period in the region. Any updates to the local tax legislation will also be notified by them so your business can make changes accordingly.
Do I need a fiscal representative to trade in EU after Brexit?
The role of a fiscal representative has become even more substantial after Brexit since the UK and EU do not share a similar tax scheme anymore.
With the EU-UK Trade and Cooperation Agreement being put into effect in December 2020 incorporating new implications concerning trades between the two regions, many tax authorities have not finalized their stance.
As such, the role of a fiscal representative in terms of helping foreign firms navigate their ways in a new market in European countries is fundamental.
What exactly do I need to do to appoint a fiscal representative?
To appoint a fiscal representative, you must ask the FR to provide the following information to the HMRC:
- The name and trading name (if different) of the FR
- The name and trading name (if different) of your company
- The address, phone, and fax numbers of the FR
- The date from which the appointment is effective
Disclaimer: While BBCIncorp strives to make the information on this website as timely and accurate as possible, the information itself is for reference purposes only. You should not substitute the information provided in this article for competent legal advice. Feel free to contact BBCIncorp’s customer services for advice on your specific cases.
- Fiscal representative in the UK explained
- The role that fiscal representative plays in the UK
- Do UK companies have to appoint a fiscal representative?
Get helpful tips and info from our newsletter!
Stay in the know and be empowered with our strategic how-tos, resources, and guidelines.