Q- My client runs a Café, and de-registered for VAT back in May 2018, on the grounds that they believed their turnover would not exceed the deregistration threshold of £83,000 over the following 12 months. This was due to a slump in trade following the opening of a popular competitor across the road. Prior to this, the client had been VAT registered since January 2015 (more than 12 months). As of December 2018, the clients turnover for the period June 2018 to December 2018 was £63,000, but their rolling 12 month turnover (January 2018 to December 2018) was back up to £93,000, as the shop across the road went out of business. Does this mean they have to re-register?
A- Under VAT registration rules, schedule 1, paragraph 1(4) of VAT Act 1994 specifies that when considering a person’s taxable turnover to determine whether registration is required, any turnover from a previous period of registration should normally be excluded.
The exception to this would be where a trader misled or withheld relevant information from HMRC at the time of cancellation – for example, a trader deregistered for VAT on the grounds that their turnover would fall below the £83,000 deregistration limit over the following 12 months because they told HMRC that they were going to close their shop for an extra day per week, however the shop never intended to do so. Read More