A UK based trader must register when their taxable supplies exceed the threshold, or know that they will. The threshold is based on the traders VAT taxable turnover which is the total of all sales that are not VAT exempt.
VAT registration must be made on a compulsory basis where:
- The traders VAT taxable turnover exceeds £85,000 (£83,000 to 31st March 2017) (the ‘threshold’) in a 12 month period.
- Or the trader expects to go over the threshold in a single 30 day period
The trader will also need to register if they only sell goods or services that are exempt from VAT or ‘out of scope’ but they buy goods for more than £85,000 from EU VAT-registered suppliers to use in their business.
VAT registration may be made on voluntary basis if the turnover is below the threshold.
A trader will need to register for VAT if they take over a business that’s already VAT registered.
Businesses Established Outside The UK
There is no threshold if neither the trader nor their business is based in the UK. They are required to register as soon as you supply any goods and services to the UK (or if they expect to in the next 30 days).
VAT Deregistration (Cancel Registration)
A trader must cancel their registration if they are no longer eligible to be VAT registered. The following are example circumstances:
- The registered trader stops trading or making VAT taxable supplies.
- The VAT registered trader joins a VAT group.
- The traders VAT taxable turnover falls below the VAT deregistration threshold £83,000 (£81,000 to 31st March 2017) at the request of HM Revenue and Customs subject to there being an appropriate reason why the registration should be kept.
It is required that the trader cancels their registration within 30 days if they stop being eligible or they may be charged a penalty.
Distance selling occurs when a VAT-registered business in one EU country supplies and delivers goods to a customer in another EU country who isn’t registered for VAT. i.e. private individuals, some small businesses, businesses that can’t register for VAT because their activities are exempt, public bodies and charities.
The turnover thresholds set by each EU state and once this threshold is exceeded or about to be exceeded in any calendar year, the trader will be required to register for VAT in that state. The threshold for such supplies into the UK is £70,000. The thresholds of other EU states are often lower and in the range €35,000 to €70,000.
VAT Mini One Stop Shop (VAT MOSS)
From 1st January 2015, the place of supply to non-business customers of telecommunications, broadcasting and e-services services has been the country where the customer is located. UK traders supplying digital services are required to charge and account for VAT according to the rules of each non-business customer’s member state. To save UK traders having to register for VAT in every EU member state where they supply to consumers, they will instead be able to use the VAT MOSS online service provided by HMRC. Traders must be VAT-registered in the UK.