Finance Bill Tracking Service 2007 | Budget 2007 | Budget Notes

BN54 VAT: increased turnover thresholds for registration and deregistration

Who is likely to be affected?

1   All businesses whose taxable turnover is close to the current VAT thresholds for registration and deregistration.

General description of the measure

2   The measure increases the taxable turnover threshold, which determines whether a person must be registered for VAT, from 61,000 to 64,000.

3   The taxable turnover threshold which determines whether a person may apply for deregistration will be increased from 59,000 to 62,000. The existing conditions for determining entitlement or liability to cancellation remain unchanged.

4   The registration and deregistration limits for relevant acquisitions from other European Union Member States will also be increased from 61,000 to 64,000.

Operative date

5   The new thresholds and limits will have effect for registrations and deregistrations on or after 1 April 2007.

Current law and proposed revisions

6   The increase in the taxable turnover threshold means that a person will have to apply for registration if:

a. at the end of any month, the value of the taxable supplies made in the past 12 months or less has exceeded 64,000; or

b. at any time there are reasonable grounds for believing that the value of the taxable supplies to be made in the next 30 days alone will exceed 64,000.

7   If at the end of any month, a person's taxable turnover in the past 12 months or less exceeds 64,000 but HMRC is satisfied that it will not exceed 62,000 in the next 12 months, that person will not have to be registered.

8   A Treasury Order amending Schedules 1 and 3 to the Value Added Tax Act 1994 will be laid before Parliament on 21 March 2007.

Further advice

9   If you have any questions about this change, please contact the National Advice Service on 0845 010 9000. Information about Budget measures is available on the HM Revenue & Customs website at