Who has to register for VAT?
A business must register once its taxable turnover passes a threshold. Learn what counts towards it and what registering means.
This path is practice in how the records and the sums work. It is not tax advice. Any rate or allowance in a question is an example for that question, so check GOV.UK for the current figures.
In this room: 3 tasks, 9 questions
- Taxable turnover3 questions
- A rolling twelve months2 questions
- What registering means4 questions
A business has to register for VAT when its taxable turnover goes over the registration threshold. The threshold is set by the government and it changes, so always look up the current figure on GOV.UK.
- Taxable turnover
- the total of all sales at the standard, reduced and zero rates, before VAT
Exempt sales, and anything outside the scope of VAT, are left out.
| Income | Amount |
|---|---|
| Adult knitwear, standard rated | 31,000.00 |
| Children's knitwear, zero rated | 22,000.00 |
| Rent from a flat let as a home, exempt | 9,000.00 |
Answer the questions below
2 more questions follow in this task.
The test is not done once a year. At the end of every month, the business adds up its taxable turnover for the 12 months just ended.
Each month the oldest month drops out of the total and the newest month comes in.
A second test looks forward: a business must also register if it expects its taxable turnover in the next 30 days alone to go over the threshold.
| Period | Amount |
|---|---|
| 12 months to 31 March | 53,000.00 |
| April of last year | 3,200.00 |
| April of this year | 5,900.00 |
Answer the questions below
1 more question follows in this task.
A business under the threshold may still choose to register. This is called voluntary registration.
- A registered business must charge VAT on its taxable sales
- It must give VAT invoices that show its VAT registration number
- It must keep VAT records and send VAT returns to HMRC
- In return, it can claim back the input tax on its purchases
A business that is not registered must not charge VAT. It cannot claim any back either, so the VAT it pays is part of its costs.
Answer the questions below
3 more questions follow in this task.