There are two tests, the history test and future test, that determine if a UK business needs to register for VAT. The history test looks at the total value of taxable supplies over the previous 12 months, and if it exceeds £82,000 the business must register. The future test requires registration if the business expects to exceed £82,000 in taxable supplies in the next 30 days. If both tests are passed, the earlier registration date must be used. Businesses must notify HMRC within 30 days if either test is passed to avoid penalties for late registration. Voluntary registration is also allowed if turnover is below the compulsory threshold.

1. When do you need to register for VAT?
from titanlearning.
(Rules for UK established businesses)

2. Compulsory Registration
There are 2 key tests that determine whether you need to
register for VAT. If either is passed you need to register.
The ‘History’ test & the ‘Future’ test.
The UK VAT compulsory registration threshold is £82,000.

3. History Test
If the total value of taxable supplies over the previous 12
months exceeds the threshold (£82,000) then the History
test is passed.

4. History Test Example
Company A Turnover is:
January £4,000
Febuary £15,000
March £21,000
April £32,000
May £40,000
June £37,000
Cumulative Turnover is:
January £4,000
Febuary £19,000
March £40,000
April £72,000
May £112,000
June £149,000

5. In a month where the registration threshold is exceeded
you are liable to register for VAT and must notify HMRC
within 30 days from the end of the month.
When should I register?

6. In this example the business must notify HMRC by 30th
June and will be registered from 1st July.
Once registered you must charge VAT from that date
onwards.
When should I register?

7. Future Test
If you expect to exceed the registration threshold in the
next 30 days, you are liable to register.
When should I register?
You must notify HMRC within 30 days of the expectation
arising.

8. When should I register?
The VAT registration date under this test is the date the
business first expected its supplies to go over the
threshold.
VAT must therefore be charged from this date.

9. Future Test Example
Company B cumulative
Turnover is:
January £7,000
Febuary £19,000
March £31,000
Company B signs a one-off
contract on 1st April worth
£60,000 for the next month.
April £91,000

10. Future Test Example
Company B knows on 1st April
that in the next 30 days the
registration threshold (£82,000)
would be exceeded.
Therefore Company B passes the
Future Test on the 1st April.
HMRC must be notified by 30th
April (end of 30 day period) and
Company B will be registered
from 1st April (start of 30 day
period).

11. History & Future Test
In situations where both tests are passed. You must use
the test that results in the earlier registration date.

12. Late Registration
If you pass one of the registration tests and are late
notifying HMRC then penalties may be charged.

13. Voluntary Registration
You can register for VAT if you are below the compulsory
threshold.
This is called a voluntary registration.

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