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

Quill Ltd is VAT registered and expects taxable supplies of £89,000 in the next 12 months. The reason is that a major customer has left. Which statement is correct?

Quill Ltd cannot deregister on expected turnover because £89,000 exceeds the £88,000 deregistration limit. The £90,000 registration limit does not apply to deregistration, and a fall in supplies does not force deregistration.

  1. AQuill Ltd may deregister because the figure is below the £90,000 registration limit
  2. BQuill Ltd cannot apply to deregister on the basis of expected taxable supplies because £89,000 exceeds £88,000Correct
  3. CQuill Ltd must deregister because supplies have fallen
  4. DQuill Ltd may deregister only if it also stops trading

Explanation

The test for voluntary deregistration is whether expected taxable supplies in the next 12 months will not exceed £88,000. £89,000 is above this limit, so the condition is not met. Using £90,000 is the mistake of applying the registration limit.

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