Chapter 14 - Registration Flashcards Preview

Paper 2: Corporate Tax & VAT > Chapter 14 - Registration > Flashcards

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Compulsory VAT Registration

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


Taxable Person

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


Voluntary Registration

Any business can register for VAT if they like. Business may do this for:
- Credibility
- To recover input VAT
- To avoid late reg penalties


Voluntary Reg Disadvantages

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


Types of Registration

- Historic test
- Future test
- Existing trader
- Intending trader


Historic Test

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


Historic Test Registration

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.


Future Test

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


Future Test Registration

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


Taxable Supplies

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


Compulsory Deregistration

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


Voluntary Deregistration

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


Pre-Registration Input Tax

- 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