ExpertMedium2 marksMultiple Choice
ACCA · Question 17 · Value added tax (VAT)
Section B: Case 1 - QuantumLeap VR Ltd
Scenario: QuantumLeap VR Ltd is a virtual reality software developer. The company began trading on 1 January 2023. Its taxable turnover was £6,000 per month for the first 10 months. In November 2023, it secured a major contract, and taxable turnover jumped to £30,000 for November and £30,000 for December.
Question: Assuming QuantumLeap VR Ltd notified HMRC on time (based on exceeding the threshold at the end of November), on what date will it be registered for VAT?
Section B: Case 1 - QuantumLeap VR Ltd
Scenario: QuantumLeap VR Ltd is a virtual reality software developer. The company began trading on 1 January 2023. Its taxable turnover was £6,000 per month for the first 10 months. In November 2023, it secured a major contract, and taxable turnover jumped to £30,000 for November and £30,000 for December.
Question: Assuming QuantumLeap VR Ltd notified HMRC on time (based on exceeding the threshold at the end of November), on what date will it be registered for VAT?
Answer options:
A.
1 December 2023
B.
30 December 2023
C.
1 January 2024
D.
1 February 2024
How to approach this question
Apply the historic test registration rule. If the threshold is exceeded at the end of a month (November), registration takes effect from the first day of the second month following that month.
Full Answer
C.1 January 2024✓ Correct
Under the historic test, the VAT registration threshold (£85,000) was exceeded at the end of November 2023. The business is required to be registered for VAT from the first day of the second month following the month in which the limit was exceeded. The second month after November is January, so registration takes effect on 1 January 2024.
Common mistakes
Assuming registration starts immediately or on the notification deadline.
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