Tx notes fa22 Final

You may now attempt Practice Question 32

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Chapter 25
VALUE ADDED TAX – VAT 
1. VAT registration 
1.1. Compulsory registration – historical turnover 
(a)
Trader
Supplies (i.e. sales) may be
‣
Standard rated – 20%
‣
Zero rated – 0%
‣
Exempt
Taxable supplies are those that are either standard rated or zero rated. Trader is able to register 
for VAT and must then account for output VAT on sales but may reclaim input VAT on 
purchases and expenses, both capital and revenue expenditure. If a trader only makes exempt 
supplies he is unable to register for VAT and cannot reclaim input VAT.
(b)
A trader making taxable supplies must register for VAT if during the previous 12 months the 
value of taxable supplies exceeded £85,000. However, VAT registration is not required if 
taxable supplies in the following 12 months will not exceed £83,000. These figures are 
exclusive of VAT.
(c)
HMRC must be notified within 30 days after the end of the period when taxable supplies 
exceeded £85,000.
(d)
The trader will be registered from the first day of the 2nd month after the limit was exceeded, 
or from an earlier agreed date. If the registration limit was exceeded at 31 March 2023, the 
business must register by 30 April 2023 and would be registered with e
ff
ect from 1 May 2023.

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