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

Which of the following is a correct statement about a person who makes only zero-rated supplies?

Zero-rated supplies are taxable supplies taxed at 0%, so they count towards the £90,000 registration limit. A trader making only zero-rated supplies must register when the limit is exceeded, though HMRC can grant exemption from registration because the trader would normally be in a repayment position.

  1. AThe supplies are exempt, so the person cannot register for VAT
  2. BThe supplies are taxable, so the person must register if turnover exceeds £90,000, but may apply for exemption from registrationCorrect
  3. CThe person must register once turnover exceeds £88,000
  4. DThe supplies are outside the scope of VAT, so turnover is ignored

Explanation

Zero-rated supplies are taxable supplies at 0%, so they count towards the £90,000 registration limit. HMRC may allow exemption from registration if the trader would be in a repayment position. Exempt supplies are the ones that are ignored.

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