Written by Ray Coman
|Annual turnover limit for registration
|Annual cash accounting upper limit
|EC Sales list reporting threshold
A - Taxable turnover is measured by reference to the last 12 months or next 30 days
Value Added Tax (VAT) is charged on the supply of taxable services and goods made in the UK by a taxable person.
The standard rate applies to the majority of supplies. A reduced rate applies to domestic supplies of light and heat. The rate of zero VAT applies to various goods including many type of food, books and ect.
A requirement to register for VAT is tested at the end of each month by comparing the cumulative turnover for the preceding twelve months against the registration threshold above. A trader is will be VAT registered for the end of the month following the month in which the VAT registration threshold was exceeded.
If a trader has reason to believe that the threshold will be exceeded in the next 30 days alone, registration is effective from the start of the 30 day period in which this expectation arose. As an example, if a business expects sales in excess of the annual threshold in the first month, there would probably be a requirement to be registered for VAT from day one.
Supplies which are exempt or outside the scope of VAT or supplies of capital assets do not contribute to the registration threshold.
It is permissible to register for VAT even where turnover is below the compulsory threshold. A trader is not permitted to register for VAT if making only exempt supplies. The recovery of VAT is restricted where there is a mixture of exempt and taxable supplies.
From 1 January 2021, it will no longer be a requirement for traders exporting from the UK to EU counties to complete an EC Sales List