Chapter 14 - Registration

Question 1

Compulsory VAT Registration

Answer 1

A business must register for VAT if:

1) taxable supplies made in previous 12 months exceeds the registration threshold (£85,000); or
2) if there are reasonable grounds to believe the value of taxable supply made in the next 30 days on their own will exceed the threshold of £85,000

Question 2

Taxable Person

Answer 2

Includes sole trader, partnership, LLP, company or unincorporated associatons

Question 3

Voluntary Registration

Answer 3

Any business can register for VAT if they like. Business may do this for:

• Credibility
• To recover input VAT
• To avoid late reg penalties

Question 4

Voluntary Reg Disadvantages

Answer 4

• Output tax is charged on sales liable to standard or reduced rate supply
• VAT accounting - additional compliance burden

Question 5

Types of Registration

Answer 5

Compulsory:
- Historic test
- Future test
Voluntary:
- Existing trader
- Intending trader

Question 6

Historic Test

Answer 6

End of every month, look back at taxable supply for the last 12 months. If the supplies in the period exceed £85,000, the business must register

Question 7

Historic Test Registration

Answer 7

When threshold is exceeded, HMRC must be notified within 30 days from end of the month in which £85,000 is exceeded.
Business will then charge VAT from the first day of the following month.

Question 8

Future Test

Answer 8

Test done every day. If taxable supplies in the next 30 days alone are expected to exceed £85,000, the business must register

Question 9

Future Test Registration

Answer 9

Must notify HMRC within 30 days from the day it becomes clear £85,000 will be exceeded within the next 30 days.
Business must start charging VAT immediately

Question 10

Taxable Supplies

Answer 10

Supply of goods or services made in the UK other than an exempt supply.

Question 11

Compulsory Deregistration

Answer 11

Dregistration applies where:
- sale of business
- changing status (eg sole trader to company)
- ceasing to make taxable supplies
HMRC must be notified within 30 days. Takes effect immediately

Question 12

Voluntary Deregistration

Answer 12

Available where a business is expected to make taxable supplies of less than £83,000 in the next 12 months

Question 13

Pre-Registration Input Tax

Answer 13

Where:
- goods acquired for the business (within previous 4 years) are still owned at the date of reg; pr
- services are supplied for the purpose of business 6 months prior to reg
input tax can be recovered on the first VAT return post registration