Actual figures not in point

Application for exception from VAT registration

The taxpayer traded as a builder. His income exceeded the VAT registration limit on 28 February 2013 so he should have registered from 1 April 2013. However his liability was established only when his accountant prepared his 2012-13 self-assessment tax return in January 2014. The taxpayer asked HMRC for an exception to being registered on the basis that turnover in the 12-month period after February 2013 was less than the deregistration threshold. HMRC refused. The taxpayer appealed.

The First-tier Tribunal noted that the taxpayer quoted actual turnover figures to HMRC whereas the decision to grant an exception was based on foresight of likely turnover. Therefore actual turnover had ‘no direct relevance on the reasonableness of a decision based on foresight’. HMRC had to make a decision according to what was ascertainable in February 2013 not February 2014 when the application was made.