VQOTW: How turnover is calculated for VAT registration when a business has been registered before
My client went over the VAT threshold in June 21 as she had three holiday cottages which were very popular with the trend for holidays in the UK during Covid. She registered from August but at the end of October she found a buyer for one of the cottages. I understand it was proving expensive to maintain and not cost-effective. On the basis that with only two cottages her turnover would drop, she applied to deregister and HMRC accepted this and cancelled her registration from the end of November. She has now started upcycling and selling furniture and home accessories and has been stunned by the sums people are willing to pay for her pieces.

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.


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.


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.


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Senior VAT Consultant
0844 892 2470

Viv has worked in VAT since 1989, when she joined HMRC as an Assurance Officer. Before joining the team as a consultant in 2000, she had spent five years dealing with written and telephone enquiries at a local VAT office.

In 2007/ 2008, she spent a year with a major accountancy firm gaining experience of VAT from a different perspective and developing skills which are relevant to her current role.

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