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ACCA Strategic Professional · Advanced Taxation (UK) · Value added tax

Brindle Ltd has been VAT registered for several years. At the end of March its taxable turnover for the previous 12 months was £85,000, and it expects taxable turnover over the next 12 months to be £86,000 because a major customer has left. It has no zero-rated supplies. Which statement is correct under the ATX-UK limits?

Brindle Ltd may apply to deregister because its expected taxable turnover for the next 12 months, £86,000, does not exceed the £88,000 deregistration limit. Deregistration is optional rather than compulsory, and the £90,000 registration limit is not the relevant test for a business that is already registered.

  1. ABrindle Ltd may apply to deregister, because expected turnover for the next 12 months does not exceed £88,000Correct
  2. BBrindle Ltd cannot deregister, because expected turnover exceeds the £90,000 registration limit
  3. CBrindle Ltd must deregister, because past turnover is below £88,000
  4. DBrindle Ltd may deregister only if expected turnover for the next 12 months is below £85,000

Explanation

A registered trader may apply to deregister if its expected taxable turnover in the next 12 months will not exceed the £88,000 deregistration limit. Expected turnover of £86,000 is below this, so it may apply. Deregistration is voluntary, so it is not compulsory, and the £90,000 limit applies only to registration.

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