My client has previously limited UK sales to just under the registration threshold. They wish to make a one-off sale that, combined with other sales, will take them over the registration turnover limit. Do they have to register for VAT?
If a taxable person has breached the VAT registration threshold on the ‘backward look’ (currently £90,000), they may look at whether they can satisfy HMRC that, in the next 12-month period then beginning, they will not exceed the voluntary deregistration limit (currently £88,000).
If HMRC are satisfied that voluntary deregistration limit will not be exceeded, then they can grant ‘exception’ from registration and the client will not be required to register.
Exception from VAT registration is detailed in Indirect Tax In-Depth at ¶43-120.
HMRC brought in new guidelines and procedures in May 2025 to improve their customer service relating to exception requests. To apply for exception the business owner should contact HMRC by telephone to request a VAT1 paper form and a VAT5EXC. HMRC’s current guidance states they will reply within 40 working days by letter stating whether they accept the application for exception or the reason as to why the exception has been refused and registration will remain applicable.
It should be noted that a person whose supplies are expected to exceed the registration threshold in the next 30 days alone, so is liable to register on the ‘forward look’, cannot be granted exception. The ‘one-off sale’ here may need scrutiny accordingly.
Whether registering or applying for exception, the normal 30-day time limit applies for notifying HMRC that they have exceeded the registration threshold.
If granted exception, this does not cease the requirement to monitor the value of taxable supplies moving forward. The exception granted is specific to the circumstance giving rise to the request. If you do become liable to register again, you can apply for another exception if you believe the conditions can be satisfied again.
Other useful links
VATA 1994, Sch. 1, para. 1(3) .
VATREG19000 : Exception from registration.
VATREG18100 : Taxable supplies: the backward look.
VATREG18200 : Taxable supplies: the forward look.
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