Section A

Apex Consulting Ltd is VAT registered. The directors realize that due to losing a major contract, their taxable supplies for the next 12 months are expected to be £81,000.

Which of the following statements regarding VAT deregistration is correct?

Answer options:

Apex Consulting Ltd MUST deregister immediately because expected supplies are below £85,000.

Apex Consulting Ltd may voluntarily deregister for VAT because expected taxable supplies are below the deregistration threshold of £83,000.

Apex Consulting Ltd cannot deregister until its historic 12-month turnover falls below £83,000.

Apex Consulting Ltd must wait until the end of the calendar year to apply for deregistration.

How to approach this question

Recall the VAT deregistration threshold (£83,000) and the rule that deregistration is voluntary if expected future supplies fall below this threshold.

Full Answer

B.Apex Consulting Ltd may voluntarily deregister for VAT because expected taxable supplies are below the deregistration threshold of £83,000.✓ Correct

A business can voluntarily deregister for VAT if HMRC is satisfied that its taxable supplies in the next 12 months will not exceed the deregistration threshold of £83,000. Compulsory deregistration only applies if the business ceases to make taxable supplies entirely.

Common mistakes

Confusing the registration threshold (£85,000) with the deregistration threshold (£83,000), or confusing voluntary vs compulsory deregistration.

Question 09 All questions Question 11

Practice the full ACCA TX — Taxation Practice Exam 2

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