When is it not necessary to register?

If you reach the threshold, you must register. However, there are two exceptions. The first is where you make the majority of your zero-rated sales. To give the details of the supplies that the business makes, contact HMRC and use the online registration process (or write to the registration office in Wolverhampton). If HMRC does not agree that the majority of your supplies are zero-rated, you will be required to register for VAT under the standard regulations.A second exception to VAT Registration is if you believe the threshold will only be briefly exceeded (for example you have an unusual one-off large sale). It is important to notify HMRC that the barrier has been exceeded but that future sales are not expected to exceed the deregistration threshold over the following 12 months. The deregistration threshold is now £83,000. It is £2000 lower than the registration threshold.While this allows the customer's price to be lower (since no VAT is levied on reduced rate or zero-rated sales), it is only useful where customers cannot recover VAT, as VAT on expenditures cannot be reclaimed.

Input tax claimThe VAT incurred by the firm on items purchased for resale or business expenses is referred to as input tax. This VAT is reclaimable on the company's VAT returns. The company might also recoup VAT on certain expenses incurred prior to registration. This includes any items purchased in the preceding four years if the company still owns them (or if they were used to manufacture other goods that the company still owns) or services received in the previous six months. Purchase VAT invoices that support the claim for input tax are required to reclaim the VAT charged. Furthermore, the goods or services obtained prior to registration must be included in a list that includes a description of the items, the purchase date, and a description of how they were used in the business.

Registration for a groupWhen a company or a limited liability partnership has more than one body corporate, they might register as a single VAT registration. This means that all group members file a single VAT return, and VAT is only charged on sales to non-group businesses. VAT is not levied on purchases made within the VAT group. If it is thought that forming a group might be beneficial, more guidance should be obtained to ensure that all of the benefits and drawbacks are recognised.Transfers of Running BusinessesWhen an existing and running business is purchased, the transaction is viewed as a transfer of a going concern. There will be no VAT levied on the transfer of the business, but the individual receiving the business must register for VAT right away. When a firm is not transferred but a collection of assets is purchased, VAT is levied on the sale of the assets. The acquiring company will almost certainly seek to register for VAT in order to reclaim the VAT charged.

It is feasible to transfer an existing VAT number when a running company is transferred. This appears to be beneficial because it gives continuity, but it is frequently not recommended because any VAT liabilities will also be transmitted. It is normally advised not to transfer the VAT registration number in order to avoid transferring the previous business's VAT liabilities to the acquiring business.

Northern Ireland is governed by its own set of laws.A Northern Ireland-based business that only makes VAT-exempt sales must register for VAT if it purchases goods worth more than £85,000 from EU VAT-registered suppliers for use in the business. This does not apply to businesses in England, Scotland, and Wales because the products obtained will be classified as imports and will be subject to VAT at the time of import.

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