AI agents for business finance: what they can and can't do
What AI agents can do in bookkeeping, close, collections and compliance today, where a person must stay in charge, and how to judge a product.
The short answer
Usually not, if the client is a business. Under the general rule for business-to-business services, the place of supply is where the customer belongs, so services to a business in Nigeria are outside the scope of UK VAT and you do not charge UK VAT. Keep evidence that the client is in business, such as its registration details or a contract. These outside-scope sales also do not count towards the £90,000 VAT registration threshold.
The general rule for business customers
For VAT, a service is taxed where it is treated as supplied, its "place of supply". For services to business customers the general rule is that the place of supply is where the customer belongs. ACCA's guidance on services to customers outside the UK (modified February 2024) puts it simply: the supply is outside the scope of UK VAT, and any local sales tax is normally the customer's responsibility. Exceptions are set out in Schedule 4A to the VAT Act 1994, with detail in HMRC's VAT Notice 741A.
For a UK freelancer or small agency, that means an invoice to a Lagos company for design, software, marketing, consultancy or writing generally carries no UK VAT.
Prove your client is a business
The general rule only applies if the customer is in business. ACCA notes you must hold evidence of that status. For a Nigerian client, practical evidence includes:
- its Corporate Affairs Commission (CAC) registration number and registered name;
- its tax identification number, if it gives you one;
- a signed contract or purchase order on company letterhead;
- a company website and business email domain that match the contract.
Keep this on file with the invoice. If the "client" is in fact an individual buying for personal use, a different rule applies: see UK VAT on services sold to individuals in Nigeria.
If you are VAT registered
- Do not add UK VAT to the invoice for a qualifying business supply.
- Add a note that the supply is outside the scope of UK VAT. ACCA describes a reverse-charge note as good practice rather than mandatory.
- Report the net value: ACCA says business-to-business supplies of services to customers outside the UK go in Box 6 of the UK VAT return.
- Input VAT: ask your accountant how outside-scope sales affect what you can reclaim on costs.
A sample invoice line
Example only. "Brand identity design, phase 1 - GBP 4,000.00. VAT: outside the scope of UK VAT, place of supply is the customer's country (Nigeria); customer to account for any local VAT." Add the client's full company name, address and CAC number, and keep the contract on file. The same wording works whether you invoice in pounds or naira; only the amount and currency change.
When the client is a Nigerian branch of a UK firm
Check who is actually contracting with you. If the work is ordered and paid for by a UK company that happens to serve a Nigerian project, the customer belongs in the UK and UK VAT rules apply as normal. If a Nigerian subsidiary or a Nigerian-registered company is the customer, signs the contract and pays, the general rule points to Nigeria. Invoice the entity that signed, and make sure the name on the invoice matches the name on the contract and on the payment.
If you are not VAT registered
GOV.UK says you must register if your VAT taxable turnover for the last 12 months goes over £90,000, or you expect it to in the next 30 days. Taxable turnover is everything you sell that is not VAT exempt or "out of scope". So a freelancer billing £70,000 to Nigerian businesses and £30,000 to UK clients has taxable turnover of £30,000 for the threshold, not £100,000.
| Example sales in 12 months | Counts towards £90,000? |
|---|---|
| £70,000 to businesses in Nigeria (outside scope) | No |
| £30,000 to UK businesses (standard-rated) | Yes |
| Taxable turnover | £30,000: below the threshold |
Example only. If UK sales grew to £95,000 over a rolling 12 months, registration would be required even though the Nigerian work still sits outside the scope.
Where the exceptions bite
The general rule does not cover every service. ACCA describes the overrides in Schedule 4A as limited, but they exist, and VAT Notice 741A sets out which services follow special place-of-supply rules. If your work is tied to property, a live event or transport in the UK, read Notice 741A or ask an adviser before leaving VAT off.
Nigerian VAT on the client's side
Not charging UK VAT does not mean no VAT at all. Nigeria's rate is 7.5% under the Nigeria Tax Act 2025, and an analysis by WTS Blackwoodstone (March 2026) says that where a non-resident supplies services to a VAT-registered Nigerian business, the Nigerian customer self-accounts and remits the VAT to the NRS. That is the client's obligation; your job is to issue a clear invoice without UK VAT. Selling to Nigerian consumers is different again: see Nigerian VAT on digital services.
Where Pryme fits
Pryme's Invoicing lets you issue invoices in pounds or naira, and a multicurrency account keeps UK and Nigerian receipts in separate balances. The Finance agent can tag Nigerian business sales separately so your taxable turnover for the threshold is easy to see; you approve its work.
Questions people ask
Do I charge VAT to a Nigerian company?
Generally no. Under the general business-to-business rule the place of supply is where the customer belongs, so services to a business in Nigeria are outside the scope of UK VAT. Keep evidence it is a business.
Do sales to Nigerian clients count towards the UK VAT threshold?
Outside-scope sales do not. GOV.UK defines taxable turnover as everything you sell that is not VAT exempt or out of scope.
What do I write on an invoice to a Nigerian business?
No UK VAT, with a note that the supply is outside the scope of UK VAT. If you are registered, the net value goes in Box 6 of your return.
Does my Nigerian client pay Nigerian VAT on my invoice?
A VAT-registered Nigerian business generally self-accounts for 7.5% Nigerian VAT on imported services and pays it to the NRS. That is the client's obligation.
Sources
- ACCA In Practice: VAT on supply of services to customers outside the UK (Sept 2022, modified 23 Feb 2024) · accessed Oct 2026
- GOV.UK: VAT registration, when to register (checked Oct 2026) · accessed Oct 2026
- Mondaq (WTS Blackwoodstone): Taxation of digital activities and cross-border transactions under the Tax Reform Acts 2025 (11 Mar 2026) · 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.