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

Zara Ltd is a UK trader making wholly standard-rated supplies and is not currently VAT registered. At the end of each month it tests its taxable turnover for the previous 12 months against the registration limit. Using the limit given in the ATX-UK tax rates and allowances for Finance Act 2025, which statement is correct?

A trader must register for VAT when its taxable turnover for the previous 12 months exceeds the registration limit of £90,000. The test is rolling and based on turnover, not profit. The £88,000 figure is the deregistration limit and does not trigger registration.

  1. AZara Ltd must register if its taxable turnover for the past 12 months exceeds £90,000Correct
  2. BZara Ltd must register if its taxable turnover for the past 12 months exceeds £88,000
  3. CZara Ltd must register only if its turnover for the last calendar year exceeds £90,000
  4. DZara Ltd must register only if its profit for the past 12 months exceeds £90,000

Explanation

The VAT registration limit is £90,000 and is tested against taxable turnover (not profit) for the previous 12 months on a rolling basis. The £88,000 figure is the deregistration limit, so it is the wrong threshold for registration.

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