A solicitor is providing tax advice to small and medium-sized businesses. The owner of one of these businesses inquires about the requirements for VAT registration.
Which of the following scenarios would make it mandatory for a firm to register for VAT?
A solicitor is providing tax advice to small and medium-sized businesses. The owner of one of these businesses inquires about the requirements for VAT registration.
Which of the following scenarios would make it mandatory for a firm to register for VAT?
The firm has an annual turnover of £95,000.
A) If a firm has an annual turnover of £95,000 or more, it is required to register for VAT. The criteria for determining whether a firm must register for VAT include the historic test and the future test. Under the historic test, a firm must register if its turnover in the past 12 months exceeds £85,000. Under the future test, the firm must register if the month's turnover is expected to exceed £85,000.
Option (B) is incorrect because balance sheet totals are not considered while determining whether a firm must register for VAT.
Options (C) and (E) are also incorrect because the number of employees working at a business does not influence VAT registration.
Option (D) is incorrect because the relevant turnover amount for VAT registration is £85,000 instead of £32,500.