Written by Ray Coman





2022/23 Note 
Standard rate 20%
Reduced rate 5%
Annual turnover limit for registration £85,000 A
Annual cash accounting upper limit £1,350,000  
EC Sales list reporting threshold Nil  
Intrastat reporting                             
Arrivals threshold £1,500,000
Dispatches threshold £250,000

 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


#2 Ray Coman, FCCA, CTA 2020-12-24 13:40
Dear Anil,

6.2 of VAT Notice 733 explains that "As exempt and zero rate supplies are included in your flat rate turnover you apply the flat rate percentage to the exempt and zero rate turnover. You may pay more VAT by being on the scheme .."

You would only be able to use 14% if a limited cost trader. The following explains what a limited cost trader is:
In view of the above consider the benefits of leaving the flat rate scheme.
#1 Anil Kumar 2020-12-20 11:24
Dear Coman & Co Ltd,

Im VAT registered under FRS scheme at 14%, I have Export Sales (services to Hongkong - Non EU), can you please suggest me the VAT code to declare the sales in the VAT return, because if I select the VAT code as Z rated even still VAT is calculated under FRS rate @ 14% which should not be the case as there is no VAT on Exports.

Please help me with this.

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