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Deregistration charges

clioclio High PeakRegistered, Tutor Posts: 10
AAT Sample Assessment Question One. A business reached the VAT registration threshold six months ago but did not register for VAT. It has since charged £42,000 to customers for standard-rated taxable supplies.
BPP text book page 19 Section 2.6 Failure to register. Details two ways a business can approach this. Either take sales as VAT inclusive and pay out of profits OR take Sales as VAT exclusive and try to collect from customers.
What in AAT's question tells me that I am to use the first option and not the second?


  • SeptemberSeptember Registered Posts: 31
    Choosing the second option would mean that they would have to try to claim back the VAT from the customers and the customers would be under no obligation to pay this. So for all the sales worth £42,000 you would treat this as VAT-inclusive and if the business did not invoice it as VAT then they have to bear the cost. So I think you would divide £42,000 by 6 to find out the value of the VAT owed to HMRC
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