ExpertMedium2 marksMultiple Choice
ACCA · Question 16 · Value added tax (VAT)
Section B - Case 1 (NovaStream Ltd)
NovaStream Ltd, a UK tech startup providing cloud services, commenced trading on 1 January 2023. Its taxable supplies were exactly £10,000 per month.
By what date must NovaStream Ltd notify HMRC of its liability to register for VAT under the historic test?
Section B - Case 1 (NovaStream Ltd)
NovaStream Ltd, a UK tech startup providing cloud services, commenced trading on 1 January 2023. Its taxable supplies were exactly £10,000 per month.
By what date must NovaStream Ltd notify HMRC of its liability to register for VAT under the historic test?
Answer options:
A.
30 September 2023
B.
30 October 2023
C.
1 November 2023
D.
31 August 2023
How to approach this question
Track cumulative turnover month by month. Identify the month end when it exceeds £85,000. The notification deadline is 30 days after the end of that month.
Full Answer
B.30 October 2023✓ Correct
Under the historic test, a business must register for VAT if its taxable supplies in the previous 12 months exceed £85,000. NovaStream's cumulative supplies reached £80,000 at the end of August and £90,000 at the end of September. Therefore, the threshold was exceeded on 30 September 2023. The company must notify HMRC within 30 days, which is 30 October 2023.
Common mistakes
Confusing the notification deadline (30 days after month end) with the effective date of registration (1st day of the second month after).
Practice the full ACCA TX — Taxation Practice Exam 2
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