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ACCA Applied Skills · Taxation (UK) · The VAT registration requirements

Fenwick Ltd has been VAT registered for six years. For the 12 months to 31 December 2026 its taxable supplies were £92,000. On 1 January 2027 it lost its largest customer, and it reasonably expects taxable supplies for the 12 months to 31 December 2027 to be £84,000. Fenwick has no inventory or assets on which input VAT was claimed. Which statement is correct?

Fenwick Ltd may apply to deregister. Deregistration looks at expected taxable supplies in the next 12 months, and the expected £84,000 is below the £88,000 limit. Past supplies of £92,000 do not prevent this, and deregistration is voluntary rather than compulsory.

  1. AFenwick Ltd cannot deregister because supplies in the past 12 months exceeded £90,000
  2. BFenwick Ltd may apply to deregister because expected supplies for the next 12 months are not more than £88,000Correct
  3. CFenwick Ltd must deregister because expected supplies are below £90,000
  4. DFenwick Ltd may deregister only after supplies actually fall below £88,000 for a full 12 months

Explanation

The deregistration test is forward-looking: expected taxable supplies in the next 12 months of £88,000 or less. £84,000 satisfies it, despite the past £92,000. Deregistration is voluntary, so it is not compulsory, and no waiting period applies.

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