AI agents for business finance: what they can and can't do
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The short answer
Digital products sold to consumers who belong in Nigeria are generally outside the scope of UK VAT, because HMRC's Notice 741A places business-to-consumer electronically supplied services where the consumer is located; sales to Nigerian businesses are also outside UK VAT under the general business-to-business rule. Keep evidence of where each buyer belongs, and look separately at Nigeria, which charges 7.5% VAT on a consumption basis and expects foreign digital suppliers to register.
UK VAT on digital sales trips up sellers because the rules differ for goods and services, for businesses and consumers, and for automated products and live work. For a UK seller with buyers in Nigeria, the core answer is reassuring, but it rests on evidence you must keep.
Three questions that decide the VAT
- Is it a service? Digital downloads, e-books, templates, software licences, streamed or pre-recorded courses and memberships are services for VAT, not goods.
- Is the buyer a business or a consumer? Notice 741A says a VAT number is the best evidence of business status for EU customers; otherwise you can accept other evidence, such as certificates from tax authorities or commercial documents. Where a customer cannot show business activity, treat the sale as business-to-consumer.
- Where does the buyer belong? For individuals, the notice uses their usual place of residence.
What the rules say
| Buyer | Rule in Notice 741A | UK VAT |
|---|---|---|
| Nigerian consumer, e-service | Special rule: supplied where the consumer is located (sections 6.4 and 14) | Outside the scope |
| Nigerian business | General rule: supplied where the customer belongs (section 6.3) | Outside the scope |
| UK consumer | Supplied where the consumer is | UK VAT if you are registered |
Section 1.4 of the notice says that when the place of supply is outside the UK, "no UK VAT is chargeable". The notice also points out that the EU VAT MOSS scheme no longer applies in the UK for sales after 31 December 2020, so a UK seller does not use it for any market.
Live versus automated
A live online class, one-to-one coaching session or consultation involves human input and may not be an "electronically supplied service". It can fall under other rules: an ACCA In Practice article on services to customers outside the UK says consultancy and similar services to any consumer outside the UK are also outside UK VAT, but the category matters for record-keeping and, in Nigeria, for how the service is treated. If you sell a mix, label each product.
Does it count towards the £90,000 threshold?
GOV.UK says you must register for VAT if your taxable turnover over the last 12 months goes over £90,000, or you expect it to in the next 30 days alone, and that taxable turnover excludes VAT-exempt and out-of-scope supplies. Sales to Nigerian buyers that are outside the scope therefore do not count towards the threshold. Your UK sales still do.
Worked example
Example only. In the last 12 months you sold £58,000 of templates to UK buyers and £41,000 to consumers in Nigeria. Total sales are £99,000, but taxable turnover is £58,000, below £90,000, so you are not yet required to register. If UK sales grow to £92,000 over a rolling 12 months, you must register within 30 days of the end of the month you passed the threshold, whatever your Nigerian sales.
Evidence to keep for each Nigerian sale
- Billing address and country selected at checkout
- Where the payment came from (a Nigerian bank or card)
- IP address or other location data from your platform, if it records it
- For business buyers, their company details or Nigerian Tax ID
The Nigerian side
Being outside UK VAT does not mean no VAT. Nigeria charges 7.5% and taxes on a consumption basis. The WTS Blackwoodstone analysis on Mondaq (11 March 2026) says foreign providers of digital services must register and remit, and that VAT-registered Nigerian business customers self-account. Registration thresholds for small foreign sellers are not settled in the sources we read. See Nigerian VAT for UK digital sellers and VAT on digital services sold into Nigeria.
If you are already VAT-registered
Registered sellers must still get the place of supply right on every sale. Charging UK VAT on a sale that is outside the scope overcharges the Nigerian buyer and can make you less competitive; failing to charge it on a UK buyer who claimed to be abroad leaves you liable. Set your checkout to decide by country, test it with a Nigerian billing address, and review a sample of orders each quarter against your evidence. Where a buyer's evidence conflicts, for example a Nigerian address but a UK card, follow the notice's approach and decide where the customer usually lives.
Keep the evidence with each order for as long as you keep your VAT records, so that a later HMRC check can be answered sale by sale.
Where Pryme fits
Nigerian buyers paying in naira to a Nigerian account number leave a clear location trail. A Pryme Business Account holds that naira separately from sterling, and regular or verifiable receipts for each sale help with VAT evidence. See also selling courses to Nigerian learners and VAT on services to Nigerian consumers.
Questions people ask
Do I charge UK VAT on e-books sold to Nigeria?
Generally no. Notice 741A places consumer e-services where the consumer is, so they are outside UK VAT.
Do Nigerian sales count towards the UK VAT threshold?
Out-of-scope sales are excluded from taxable turnover, per GOV.UK, so they do not count.
What proof do I need that a buyer is in Nigeria?
Notice 741A uses usual place of residence for individuals; keep billing address, payment origin and location data.
Can I use MOSS for Nigerian sales?
No. MOSS no longer applies in the UK for sales after 31 December 2020, and never covered Nigeria.
Sources
- HMRC VAT Notice 741A: place of supply of services · accessed Oct 2026
- GOV.UK: VAT registration, when to register · accessed Oct 2026
- Mondaq (WTS Blackwoodstone): taxation of digital activities under the 2025 tax reform Acts (11 Mar 2026) · accessed Oct 2026
- ACCA In Practice: VAT on supplies of services to customers outside the UK (Sep 2022, modified 23 Feb 2024) · accessed Oct 2026
This article is general information, not financial, legal or tax advice. Products described are provided under the terms on this site and are subject to regulation and eligibility.