Value Added Tax Act 1994 Schedule 1 paragraphs 1–4

Liability to be registered

Schedule 1 paragraphs 1 to 4 set out when a person making taxable supplies becomes liable to register for VAT, the thresholds that apply, when that liability ceases, and how HMRC can direct that artificially separated businesses be treated as a single taxable person.

• A UK-established person must register for VAT if the value of their taxable supplies exceeds £85,000 in the past twelve months, or if there are reasonable grounds to believe supplies will exceed £85,000 in the next 30 days — the same tests apply where a business is transferred as a going concern.
• Registration is not required if HMRC is satisfied that taxable supplies in the coming year will not exceed £83,000; equally, a registered person may cease to be liable if HMRC is satisfied future supplies will stay below £83,000, unless the reason is that the person plans to stop or suspend trading for 30 days or more.
• Certain supplies are excluded when calculating whether the threshold is met, including supplies of capital assets of the business (other than taxable, non-zero-rated supplies of interests in land) and supplies connected with fiscal warehousing.
• Where two or more persons artificially separate their business activities to stay below the registration threshold, HMRC may direct that they be treated as a single taxable person — all named persons then become jointly and severally liable for VAT due and for compliance obligations.