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VAT de-registration

If your gross retail sales are say £90K every year, when can you de-register for VAT ?

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A theoretical question that has puzzled me for a while, but might affect a client soon. The VAT de-registration taxable turnover limit is £83K.

Let's say my client sells CDs online, and his sales are consistently £90K, so has to register and pay 1/6th over to HMRC, and so his net sales become £75K, and so he can de-register after a few quarters, but then his turnover obviously goes back upto £90K, and has to re-register a few quarters after that....and so on. Which is a bit crazy.

Or could he get an exception because by registering, he knows that his taxable turnover in the future will drop below the registration limit, which would in effect be a registration limit of £102K for retailers, so I presume very unlikely.  How does this actually work in practice ?

 

 

Replies (7)

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By djn24
27th Nov 2019 15:12

Surely that means his turnover is below the VAT limit then as it is £75k plus vat.

If they deregister for VAT, stop charging VAT, then the sales would be £75k wouldn't they and wouldn't be £90k.

Doesn't seem to be an issue here.

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Replying to djn24:
By ireallyshouldknowthisbut
27th Nov 2019 15:20

Its retail.

They are not selling at £75k+VAT

They are selling at £90k.

So if they deregister the turnover is still £90k, so they need to register. So in effect, they cant deregister.

Depending on the purchase VAT, the answer might be to sell less.....or suck it up.......or flat rate.

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Replying to ireallyshouldknowthisbut:
By djn24
27th Nov 2019 16:38

ireallyshouldknowthisbut wrote:

Its retail.

They are not selling at £75k+VAT

They are selling at £90k.

So if they deregister the turnover is still £90k, so they need to register. So in effect, they cant deregister.

Depending on the purchase VAT, the answer might be to sell less.....or suck it up.......or flat rate.


Surely they just reduce their prices by 20% to account for the fact that they are not VAT registered??Or even better by 10% to stay below the VAT limit and make a little more profit.
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Replying to djn24:
By kenny achampong
27th Nov 2019 17:28

He doesnt have prices as such, its mainly 2nd hand CDs/records on ebay. But I see what you say, and he has suggested he might go away for a month to stay under the £90K.

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Replying to djn24:
RLI
By lionofludesch
27th Nov 2019 15:21

djn24 wrote:

If they deregister for VAT, stop charging VAT, then the sales would be £75k wouldn't they and wouldn't be £90k.

Doesn't seem to be an issue here.

Would they ? He'll need to charge more to cover the input tax he can't claim.

Not to mention that his customers are (collectively) prepared to pay £90000.

It's not as straightforward as you claim.

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Replying to lionofludesch:
By djn24
27th Nov 2019 16:40

lionofludesch wrote:

djn24 wrote:

If they deregister for VAT, stop charging VAT, then the sales would be £75k wouldn't they and wouldn't be £90k.

Doesn't seem to be an issue here.

I suppose it depends on the input VAT claim.

Would they ? He'll need to charge more to cover the input tax he can't claim.

Not to mention that his customers are (collectively) prepared to pay £90000.

It's not as straightforward as you claim.


I suppose it depends on the Input VAT claimable
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By djbrown
28th Nov 2019 11:39

If it's mostly 2nd hand cds, he should have a look at the "Global Accounting Scheme" - a slightly simpler version of the main second hand goods scheme.

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