It is still a common situation where a taxpayer exceeds the registration threshold, and only identifies it several months later. An argument is then raised that the taxpayer (in retrospect) expected his turnover to fall below the threshold in the next twelve months. He therefore asks for exception from registration, under the terms of Sch 1, para 4.
That the Commissioners must take into account only those facts which would have been available at the time the threshold was breached and cannot consider information that became available later or with the benefit of hindsight.
The Commissioners must come to the decision that they believe would have been made at the time when the threshold was breached. (see para 18(a) & (b))
Interestingly, an argument for HMRC stated that the retrospective application of the future turnover test may lead to a taxpayer gaining an unfair advantage over a similar taxpayer who advised his liability to register at the proper time.
When a taxpayer has a liability to notify HMRC that he/she has exceeded the registration threshold, an application for exception from registration can be made at the same time, but only if the taxpayer expects his/her turnover to drop below the (deregistration) threshold in the following 12 months. An Appeal against HMRC’s decision not to allow exception is based on whether HMRC acted reasonably in making their decision.