Some UK notes, not about the Store, but about UK rules and regulations of one person business. I'm no an expert, and some of this may be wrong (but hopefully not!); this is simply what I've learned from running such a business for ~5 years:

To operate a business in the UK, you don't have to form a company; that is, you don't have to incorporate. If you operate a business just as yourself, without a company, then you're a sole-trader.

However, if you don't have a company (and aren't employed by one), and are making money selling something as a business, and that would include making even a tiny amount from an obscure app coded in your spare time, then you must register as self-employed, and you are expected to fill a tax return and declare your income on it.

(You don't have to register self-employed for things like selling a few of your things second hand on Ebay, but you would have to do it if you, say, regularly bought and sold things through Ebay. I don't know the exact rules, but if you're operating even a very small business, that would count as self employment).

If you decide to form a company, that's very easy in the UK. You can even do it online, quickly; there are lots of services offering that (actually you buy a pre-existing company and have the name changed, in that case). Since quite recently, you can operate a one-person company with just one person; until recently, you needed the cooperation of a second person. You will be a director and therefore also an employee of your company, and are expected to fill a tax return.

Lots of people have their own companies in the UK; it's not that arduous. Often they do it for tax benefits, and limited liability protection in case of bankruptcy and other liabilities. Unfortunately in recent years, the tax benefits have reduced to the point where it's barely worth it at low income from a company.

But there are reasons to avoid forming a company too: The accounting is a lot more complicated (you employ yourself, so you have to handle PAYE, employers' as well as employee's NI, corporation tax, etc.) and the rules you have to follow are stricter, so you'll probably have to hire an accountant; you'll hire a solicitor to set it up (and it costs something to set up); you must have a company bank account separate from your personal accounts (which banks charge a little for); you must pay for certain kinds of insurance due to having an employee even though it's only you; and most of all: you must file correct accounts in the correct format, on time, every year, to Companies House, as well as some other documentation. If you fail to file on time, the penalties range from significant fines up to jail time(!), so if you're chronically disorganised like me, this may be offputting.

An accountant will generally charge more to handle company accounts than sole-trader accounts, because company accounts are more complicated. And you really need an accountant, in practice, if you're doing company accounts, while you can get by without one for sole-trader accounts, if you're prepared to read all the literature. That said, this is bread and butter stuff because so many people in the UK incorporate, so it's not hard to find a suitable accountant.

By the way, contract software developers often have a company, even if they work every day in someone else's office, because that's just how it's done around here... It's seen as a sign of professionalism among other reasons, and many places require it. It may be the developer's own company, or they might work under the umbrella of an agency company.

Regarding VAT: VAT registration is much the same whether you're a company or a sole-trader. Above a turnover threshold, you must register for VAT. Below it, VAT registration is optional.

Mostly people below the threshold don't register for VAT, but there are reasons to do so, and reasons not to. A reason to is you can claim back VAT which you are charged on expenses, for example when you buy your N900 exclusively for business purposes you can reclaim the VAT ;-). Or you can go on the VAT "flat rate scheme", where you can't claim on expenses, but you charge others VAT and don't have to give up all of the VAT you have charged others. It's a nice little net benefit if you have low expenses. But a reason not to register for VAT is: Then you can afford to charge less, because your price to others doesn't include VAT; or equivalently, you get to keep more of what you charge.

The decider is usually: Are you selling mostly to VAT-registered traders (in which case you add the VAT to your price as they can just reclaim it, so that's no big deal), or mostly to non-VAT-registered traders and individuals, who cannot claim back the VAT you have to charge them. VAT administration is quite easy, so that's not an issue (but don't push the authorities, just do what you're supposed to).

Finally, I'm not sure what's going on here, but it gets more complicated with international transactions, including within the EU. I've noticed recently some places in the US are starting to require a VAT number for "business purchases" from the UK (Go Daddy domain names comes to mind), which is a bummer if you aren't VAT registered but would tick the business purchase box... I'm not sure what's going on, but there's a major change in the way VAT is handled on transactions between countries about to kick in in January 2010... for business customers, it'll be completely different than what happens within a country. This might be connected with the Ovi Store requiring a VAT number, which someone has mentioned. Ovi Store payments to publishers would surely count as business to business transactions for VAT purposes.

Hope I got all that right. :-)