VAT Registration (previously Vol reg)

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I may be overthinking, so if anyone can clarify that would be much appreciated.

Client was renovating some FHL so he did a voluntary VAT registration so he could claim back the VAT. He registered from 1/4/22 and deregistered 28/2/23.

That side of things is all good (no need to worry about cap goods scheme, everything covered)

Fast forward and he has given me his year end 31 march 2024 books.

First thing I do is check his turnover, and you guessed it rolling turnover for 12 months from 1 July 2022 to 30 June 2023 is £88,000

Now my question is this - Is this the correct period to check the turnover to identify when he should re-register?

OR should i be checking from when he deregistered so from 1 March 2023 onwards? (he also exceeded the threshold this way but later in the year - August 2023)

Thanks in advance 



Replies (7)

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By FactChecker
20th Apr 2024 18:18

The red lights in my (non-knowledgeable) VAT brain started flashing ... re can you 'retain' the reclaimed VAT if the supplies from whence it came don't go on to be part of what is sold whilst VAT registered?

But a much simpler thing to check is whether he should have been able to de-register in the first place? The threshold is different than the one that demands registration ... and he would have had to confirm expected turnover (or something like that)?

Note: "HMRC will automatically re-register you if they realise you should not have cancelled. You’ll have to account for any VAT you should have paid in the meantime."

Thanks (2)
Replying to FactChecker:
By FactChecker
20th Apr 2024 18:20

And an apparent (if over simplistic) answer to my first question in previous post is:

"When you cancel your VAT registration, you usually make what is known as a deemed supply of the goods you have on hand. This means you may have to account for VAT on some of your business assets and stock on hand, depending on:
- what they are
- how you obtained them
- why you’re cancelling your registration
You will not have to account for VAT if the total VAT due on the assets would be £1,000 or less."

Thanks (3)
By jonibarnes
20th Apr 2024 18:27

The original purchase of the FHL was exempt and the refit costs didnt exceed 250k therefore it doesnt come under the cgs.

We accounted for VAT on moveable assets/stock on de- registration

I am really just wondering about the date he needs to re-register - You are correct 83,000 is the figure we should be looking at

Thanks (0)
Replying to jonibarnes:
By lionofludesch
21st Apr 2024 08:01

jonibarnes wrote:

The original purchase of the FHL was exempt and the refit costs didnt exceed 250k therefore it doesnt come under the cgs.

Just one of a number of considerations. And not the first that would spring to my mind.

Thanks (0)
By Matrix
20th Apr 2024 19:31

What changed between the de-registration application and the summer? Surely he would have known about the bookings, availability, prices etc when he ticked the box to say he expects the sales to be below the dereg threshold?

Thanks (1)
By lionofludesch
20th Apr 2024 19:59

I' d be concerned about the validity of his claim. When were these renovations complete? When was it first let? If he deregistered before the first letting, I would suggest that there may be a problem.

But, to answer the question you asked, same rolling twelve month period as usual.

Thanks (1)
By Jason Croke
21st Apr 2024 14:57

Once deregistered, only the turnover post deregistration applies, albeit subject to a number of conditions and rules, which are outlined here

"Schedule 1, paragraph 1(4) provides that, once a person has cancelled their registration, we will usually disregard any turnover from the previous period of registration when we are calculating when they become liable to register again"

Assuming output tax was properly declared upon deregistration, such as white goods/furniture at a fair market value, and not a casual 'furniture not worth anything' declaration, else it opens the door to HMRC counting turnover in the registration period, so hopefully an accurate output tax declaration was made as well as the right deregistration threshold, etc.

Thanks (1)