Businesses must register for VAT if their taxable turnover exceeds the VAT registration threshold, or if they expect it to exceed the threshold in certain circumstances.
The VAT registration threshold is currently £90,000. The threshold applies to the value of taxable supplies made by a business.
A business must register for VAT if either of the following applies:
- At the end of any month, the value of taxable supplies made in the past 12 months exceeds £90,000; or
- At any point, there are reasonable grounds to believe that the value of taxable supplies in the next 30 days will exceed £90,000.
For the first condition, HMRC gives the following example. On 15 July, a business reviews its turnover and finds that taxable supplies made in the previous 12 months total £100,000. This is the first time the business has exceeded the VAT threshold. The business must apply for VAT registration by 30 August, and the effective date of registration will be 1 September.
The second condition can apply where a business knows it will exceed the threshold in the next 30 days. For example, if a business agrees a £100,000 contract on 1 May and payment is due at the end of the month, it must apply for VAT registration by 30 May. The effective date of registration will be 1 May.
The £90,000 threshold also applies to relevant acquisitions of goods from EU Member States into Northern Ireland.
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