At the rate her upcycling business has taken off, I notice her rolling 12 months turnover getting close to £85000 again. Is there any difference in how her turnover is calculated if she has been registered before, and might HMRC register her back to November if her forecast proves inaccurate?
Your client was eligible to deregister because although she was continuing to make taxable supplies, she was able to satisfy HMRC that the value of those supplies in the following 12 months would be below the deregistration threshold.
https://www.gov.uk/hmrc-internal-manuals/vat-deregistration/vatdreg04100
As long as a person does not mislead HMRC into cancelling the registration, for example by failing to mention relevant information about future supplies, then the turnover from the previous period of registration is ignored when calculating the date for compulsory re-registration. My advice is on the basis that this new business venture was not envisaged when she applied for deregistration.
Where a business has been registered for more than 12 months, this means that its turnover will just be counted from when its registration was cancelled. However where, as in your client’s case, the registration was for less than 12 months, its turnover will be calculated by looking at the last 12 months but disregarding the period of registration. So, at the end of March 22, your client would count April to July 21 and December 21 to March 22.
https://www.gov.uk/hmrc-internal-manuals/vat-registration-manual/vatreg18150
Where HMRC finds that a person has withheld relevant information at the time of cancellation, the turnover from the previous period of registration would be included in establishing the date for re-registration. The earliest date the business would be liable to re-register would be the 1st day of the second month following deregistration. Using the dates from your client’s deregistration, this would be 1st January.
https://www.gov.uk/hmrc-internal-manuals/vat-deregistration/vatdreg15000
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