One Off Big Invoice - VAT Implications

[Porky]

Hi

Quick question for any accountant experts here please

So one of my companies is a small consulting and investment company, not earth shattering, talking £50/£60k p.a and will be like that ongoing possibly less every year, so nowhere near the VAT threshold. Nor do I want the hassle of vat either.

Anyhow this year due to a major deal I’m working on I will secure a one off consultancy fee of £150k, single invoice. This is a one off event, unlikely to land anything like this in the future. Does this mean I have to register for VAT just for this one invoice and then de-register after? Or is their a special way of dealing with this as a one off?

Thanks in advance

 

[StevensOnln1]

If it's a one-off event and you wouldn't otherwise be over the VAT threshold you can ask HMRC for an exemption from registering.

 

[Porky]

Thanks ver6 much for your prompt reply.

Oh that’s good so does that mean we just treat as a part of capital gains at the end of the year?

Also, how long does it take on average to get an exemption from registering? Is it a quick process or something I need to apply for months in advance?

Thanks

 

[NicoJ]

May seem pedantic but its important to look for the correct forms. Its not an exemption you are looking at here but an exception. You are supposed to inform HMRC within 30 days of breaching the registration threshold (same as registering) but you need to inform HMRC why this was a one off and why you expect your turnover to be under the threshold in the future.

HMRC will then consider whether to grant the exception. If they don't they will register you from the date you breached the threshold. HMRC are notoriously slow at dealing with almost anything right now.

Its not a capital gain either, its income tax or CT.

 

[DWS]

As said above, it is an ‘exception’ you need to apply for, last one I did took nearly 2 years for it to be approved!

 

[MyAccountantOnline]

Thanks ver6 much for your prompt reply.

Oh that’s good so does that mean we just treat as a part of capital gains at the end of the year?

Also, how long does it take on average to get an exemption from registering? Is it a quick process or something I need to apply for months in advance?

Thanks

Getting a VAT exception doesn't change how the income is taxed - it'll still be taxable income.

It took HMRC 12 months to reply to the last exception request I made. It was accepted.

 

[VJR Business Support Ltd]

Whilst I understand not wanting to register for VAT, with MTD coming into effect, you'll eventually be submitting quarterly returns with the data anyway.
You can always register for VAT and the deregister at a later date when your income drops below the threshold.