BYOM Ltd: what the UK company sells.

A software company that sells to UK merchants takes on a set of legal duties the moment it issues its first invoice. Some are filings you can see on a public register. Some are tax rules that change the number on your invoice. Others are contract rules that decide what you can claim if the software fails. This post sets out what a UK supplier has to be and show, and what to check before you sign up with any software as a service vendor.

The company has filing duties you can read

A limited company has to tell Companies House what it is doing, and the record is public. GOV.UK says a company must check the information Companies House holds about it every year and file a confirmation statement at least once every 12 months, with a 14 day grace period after the review period ends. Filing costs £50 online or £110 by post. A company that does not file can be fined up to £5,000 and may be struck off.

Annual accounts are the second duty. GOV.UK says all companies must file annual accounts with Companies House, even if they are dormant or not trading. Statutory accounts include a balance sheet, which shows the value of everything the company owns, owes and is owed, and a profit and loss account that shows sales, running costs and the profit or loss. They also include notes and, except for micro entities, a director's report. Companies must use either International Financial Reporting Standards or new UK Generally Accepted Accounting Practice.

For you as a buyer, the filing history is a cheap health check. A supplier with a current confirmation statement and accounts filed on time is meeting the basic duties the law sets. A record with late filings, a recent strike off notice or a string of changed officers tells you the business may be unstable, and you would want to know that before you move your catalogue or your helpdesk onto it.

VAT changes the price you pay

GOV.UK sets the VAT registration threshold at £90,000. A business must register if its total taxable turnover for the last 12 months goes over £90,000, or if it expects to go over that amount within the next 30 days. After crossing the threshold it has 30 days to register, and the effective date is the first day of the second month after the threshold was crossed. A young software company with a handful of customers may be below the threshold and not charging VAT at all. Once it passes it, the standard rate applies. GOV.UK lists the standard rate at 20% for most goods and services.

That matters when you compare prices. Take a plan advertised at £200 a month. If the supplier adds VAT at 20%, you pay £200 plus £40, which is £240. If the £200 already includes VAT, the net price is £200 divided by 1.2, which is £166.67. Both are fair ways to quote, and a gap of £40 a month is £480 a year. If you are VAT registered, ask your accountant how much of that VAT you can reclaim. If you are not registered, the VAT is part of your cost, so ask whether a price is quoted with or without it.

HMRC's VAT guide also sets out the B2B general rule for services, which is that the supply is made where the customer belongs. For a UK merchant buying from an overseas supplier, that means you may have to account for the VAT yourself under the reverse charge procedure. The guide says you must account for the output tax due and that you can recover the VAT on those services as input tax, subject to the normal rules. If a software supplier sends you a zero VAT invoice from outside the UK, check with your accountant how it should be treated in your return.

A worked example shows how the date falls. A supplier whose turnover passes £90,000 during June must register within 30 days, and the effective date is the first day of the second month after June, which is 1 August. Its invoices from that date carry VAT, and a customer on a fixed price plan can see a 20% rise appear without any change in the product. Ask any new supplier whether it is registered, and whether your plan price was set with VAT in mind.

Consumer law mostly does not cover you, and unfair terms law does

The Consumer Rights Act 2015 has a chapter on digital content. It gives people a right to digital content of satisfactory quality (section 34), fit for a particular purpose they have made known (section 35) and as described (section 36). The remedies include repair or replacement within a reasonable time and without significant inconvenience (section 43) and a price reduction, including the right to a refund, when repair or replacement is impossible or disproportionate (section 44). Section 47 says these rights cannot be excluded or restricted by contract terms.

That chapter applies to a contract for a trader to supply digital content to a consumer. Section 33(1) is explicit about that. A merchant buying software for a business is not a consumer in that sense, so the statutory remedies above are not the ones you can lean on. Your remedies come from the contract you accept, which is why reading it matters. It is easy to assume the consumer rules follow you into a business purchase. The statute says otherwise, and a supplier's terms are free to be less generous to a business than to a consumer.

The law that does reach business contracts is the Unfair Contract Terms Act 1977. Section 3 applies where one party deals on the other's written standard terms of business. In that case the party who wrote the terms cannot, by reference to any contract term, exclude or restrict any liability of its own when it is in breach of contract. It also cannot claim to be entitled to render a performance substantially different from what was reasonably expected, or no performance at all, unless the term satisfies the requirement of reasonableness. Software as a service is nearly always sold on written standard terms, so these clauses are the ones to read: the liability cap, the right to change the service, the right to suspend it and the notice period for ending it.

Two practical points follow. If the liability cap is tied to the fees you paid, work out what a day of lost service would cost you before you accept it. On a £200 plan a cap of one month of fees is £200, which may be less than an afternoon of missed orders. And a clause that lets the supplier change the product in any way it likes is the kind of term section 3 tests for reasonableness, which gives you a basis for pushing back in writing.

Read the termination clause alongside those two. A supplier that can end the contract on a few days' notice while you must give a month leaves you exposed if your store depends on it. Ask for the notice periods to be balanced, and put the request in writing so there is a record of it.

Data and platform duties sit on top of the contract

If the software reads your customers' personal data, UK GDPR treats the supplier as your processor in most cases. Article 28 sets the minimum content of the contract. The processor processes personal data only on documented instructions from the controller, keeps staff bound by confidentiality, takes the security measures Article 32 requires, helps you respond to requests from the people the data is about, assists with your wider obligations on security and breaches, deletes or returns all the personal data at the end of the service, and makes available the information needed to show it complies. A processor must also get the controller's prior specific or general written authorisation before it engages another processor, and it stays fully liable to the controller for that other processor's performance.

A supplier selling through the Shopify App Store has a second set of duties. Shopify's Partner Program Agreement, last updated 27 February 2026, says a partner with access to merchant data may only use or store it to provide its services to that merchant, may keep it only as long as reasonably necessary, must use industry standard measures to protect it and must report a breach immediately and no later than 24 hours. It must follow all applicable laws on the protection and privacy of personally identifiable information. Developers also cannot use merchant or customer data to create, develop, train, fine tune or improve any machine learning or artificial intelligence systems without explicit written consent from Shopify or the merchant.

The same agreement sets the commercial rules. Under the App Plan, developers pay Shopify a percentage of revenue and must use Shopify's Billing Resource for merchant charges, or send payments directly to Shopify if they do not. Fees below $25 are withheld until the balance reaches $25. None of that raises your invoice by itself, but it explains why an app billed through Shopify shows up on your Shopify invoice and one billed outside it comes from a separate supplier with its own terms.

An annual prepayment is a liability on the supplier's books

Software as a service has its own accounting. Sage's guide to SaaS revenue recognition says the revenue from subscriptions, usage and services is recorded as the related services are delivered, not simply when a customer is billed or pays. Amounts a SaaS company receives or invoices before delivery are generally recorded as a contract liability and recognised as revenue when the obligation is met. The guide's example is a $1,200 annual subscription paid upfront. The full $1,200 is recorded as deferred revenue, and the company recognises $100 a month as the service is delivered.

The practical reading for a buyer is that a prepaid year is money the supplier holds for service it still owes you. On its balance sheet it appears as a liability until it is earned. A company with large deferred revenue and little cash has used customer prepayments to fund its running costs, which is legal and common but concentrates the risk on you if the business fails. Before you pay twelve months upfront, check what the contract says about refunds if the supplier ends the service early, and compare the annual discount with the risk. A 20% discount on a £2,400 plan saves £480, and it also puts £1,920 of your cash in the supplier's hands for the year.

A short checklist for any software supplier

The table below turns the sections above into questions a merchant can answer from the public record and the contract before signing.

Put the answers in one document with the date you checked. When a supplier changes its terms or its price, you have the earlier version to compare. Repeat the check once a year, or whenever the supplier announces a change to its terms.

What BYOM Ltd sells

BYOM Ltd is a UK software company, registered in England and Wales. It sells software: one AI assistant that works across your whole commerce stack. Kina is that assistant. Plans start at £200 a month.