Exception from VAT Registration

A case has recently gone against the taxpayer at tribunal on his appeal against HMRC’s refusal to allow an exception from registration for VAT.

The facility to obtain an exception from registration is not widely known.  The principle is that if you go over the registration threshold but you have reason to believe that the spike in turnover is only temporary and that you will be below the threshold over the next 12 months, you can ask Customs to let you off having to register.

Some who are aware of the facility may not be aware that it is only applicable on forecasts based on information available at the date or registration.  If something happens a day after that brings future turnover into question, that is no good to you.

In this case, it was a late registration and turnover had fallen since.  That fall, however, was caused by the loss of a contract some months after.  Too late and the appeal was (rightly) rejected.

You need to be so careful with turnover levels vs the registration threshold and then so careful with reasoning behind any forecasts made in support of applying for exception from registration.