VAT threshold peaking

[ann marie]

Hi Everyone,

I have a VAT problem. I've made the 'apparent' common error of waiting until I do my tax return for 08-09 before looking at my turnover.I am a sole trader and my accounts year is april till march.
I have found that in Feb 09 I went over the VAT threshold however, looking at my figures for Apr 09-Mar10 I will have a turnover of approx 50,000, in 2008 I had a lot of work with one particular company, but that hasn't happened in 2009. I have read that if you can show going over the threshhold was temporary then you don't have to register, but I'm sure I should do something, can you point me in the right direction please??

[David Griffiths]

If, at the time that you exceed the threshold you have evidence that the value of your supplies will reduce, then you still have to notify the National Registration Service within 30 days of exceeding it. You have to provide evidence and explain why your value of supplies won't exceed the deregisration threshold in the coming 12 months.

Para 2.7 here (http://customs.hmrc.gov.uk/channelsPortalWebApp/channelsPortalWebApp.portal?_nfpb=true&_pageLabel=pageExcise_ShowContent&id=HMCE_CL_000086&propertyType=document#P197_17001)

Effectively, that means that at the time that you should have registered you would have known that the level of work was going to fall, and be able to provide evidence of it.

We got one client off using this provision, but there was one massive invoice, based on a success fee, which pushed the turnover over the limit and quite clearly wasn't going to recur, so his income fell back to the normal levels.

Another case where the trade simply didn't generate the turnover with no clear expectation that it would go that way failed.

There's no harm in trying, but on the information that you've given I would say that it's very much in the balance whether you succeed or not.