538 others answered this question

Question 1d i

(d) Richard’s sales since the commencement of trading on 6 April 2012 have been as follows:
April to July 2012 £10,500 per month
August to November 2012 £14,000 per month
December 2012 to March 2013 £21,500 per month

These figures are stated exclusive of value added tax (VAT). Richard’s sales are all standard rated.

As a trainee Chartered Certified Accountant you have advised Richard in writing that he should be registered for VAT, but he has refused to register because he thinks his net profit is insufficient to cover the additional cost which would be incurred.

Required:
(i) Explain from what date Richard Feast was required to be compulsorily registered for value added tax (VAT) and the VAT implications of continuing to trade after this date without registering.

Note: You are not expected to explain the VAT penalties arising from late VAT registration. (4 marks)

The following tax rate and limits are to be used in answering the questions:

Value added tax (VAT)
Standard rate 20%
Registration limit £77,000
Deregistration limit £75,000