Chapter 2 - 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 associations

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

Future Test

Answer 7

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

Question 8

Future Test Registration

Answer 8

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 9

Taxable Supplies

Answer 9

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

Question 10

Compulsory Deregistration

Answer 10

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 11

Voluntary Deregistration

Answer 11

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

Question 12

Pre-Registration Input Tax

Answer 12

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