VAT Registration limits
For the 2019/20 tax year, the VAT registration threshold is set at £85,000, but can change each year.
Taxable supplies at both the zero rate and positive rates are included in the above limit.
All of a person’s taxable supplies are considered, because it is ‘persons’ not ‘businesses’ who can or must register.
If a person took over a business as a ‘going concern’, he is deemed to have made the vendor’s supplies for the purposes of registration.
These limits are exclusive of VAT, as VAT is not chargeable unless a person is registered or liable to be registered.
The limit which applies for a particular past period is that which is in force at the end of the period.
There are two alternative tests of the liability to notify HMRC of a person’s liability to register as a result of making taxable supplies:
(1) past 12 months turnover limit; and
(2) future 30 days turnover limit. Registration is required if there are reasonable grounds for believing that the value of taxable supplies in a period of 30 days will exceed the limit. This limit is the same as that for the past 12 months, but applies to 30 days from any time.
The following are excluded from the supplies for the purpose of applying the registration limits:
(1) the value of capital supplies (other than of land); and
(2) any taxable supplies which would not be taxable supplies apart from VATA 1994, s. 7(4), which concerns removal of goods to the UK.
Any supplies made at a previous time when the person was registered are disregarded if all necessary information was given to HMRC when the earlier registration was cancelled.
Supplies from other member states (distance selling into the UK)
Cumulative relevant supplies from 1 January in year to any day in same year of £70,000
If certain goods, which are subject to excise duty, are removed to the UK, the person who removes the goods is liable to register in the UK because all such goods must be taxed in the country of destination. There is no de minimis limit.Generally, the value of relevant supplies is of those made by persons in other member states to non-taxable persons in the UK.
Future prospects rule: a person is also liable to register at any time if there are reasonable grounds for believing that the value of his relevant acquisitions in the period of 30 days then beginning will exceed the given limit. This limit is the same as that for the period starting on 1 January above.
Assets supplied in the UK by overseas persons
From 21 March 2000, any person without an establishment in the UK making or intending to make ‘relevant supplies’ must VAT register, regardless of the value of those supplies.
‘Relevant supplies’ are taxable supplies of goods, including capital assets, in the UK where the supplier has recovered UK VAT under:
•Directive 2008/9 for a person in a member state as regards VAT incurred in another member state; or
•Directive 86/560 (the thirteenth VAT directive) for claimants established outside the member states.
This applies where:
•the supplier (or his predecessor in business) was charged VAT on the purchase of the goods, or on anything incorporated in them, and has either claimed it back or intends to do so; or
•the VAT being claimed back was VAT paid on the import of goods into the UK.
Electronic, telecommunication and broadcasting services
A person can register if he makes or intends to make qualifying supplies, i.e. electronically supplied services to a person who belongs in the UK or another member state and who receives such services otherwise than for business purposes. The person who registers must have neither a business establishment nor a fixed establishment in the UK or in another member state in relation to any supply. Generally, the person must also be neither registered nor required to be registered for VAT in the UK or the Isle of Man or, under equivalent legislation, in another member state.
Digital services in the EU from 1 January 2015 (VAT MOSS)
From 1 January 2015, there are new place of supply rules for VAT on the supply of digital services by businesses to consumers in the EU. VAT on digital services will be paid in the consumer’s country, not the supplier’s country. It will be charged at the rate that applies in the consumer’s country. Suppliers of digital services to EU consumers can either:
•register for VAT in each EU country; or
•register to use the VAT Mini One Stop Shop (VAT MOSS) online service.
VAT Moss enables businesses to account for the VAT due on business-to-consumer (B2C) sales in other EU countries by submitting a single quarterly return and payment to HMRC. HMRC will send an electronic copy of the appropriate part of the return, and any payment, to each relevant country’s tax authority.
Non-established taxable persons
From 1 December 2012, if a person makes taxable supplies in the UK but has no establishment there, he must register for VAT regardless of the value of such supplies. Thus, non-UK established taxable persons (NETPs) no longer benefit from the UK VAT registration threshold.
A NETP is any person not normally resident in the UK, does not have a UK establishment and, in the case of a company, is not incorporated here.