VAT registration threshold: £90,000, the two tests, and the deadline for each

The VAT registration threshold is £90,000 of taxable turnover. Two independent tests can push a business over it — one looking backwards over twelve months, one looking forwards over thirty days. They have different triggers, different deadlines and different effective dates.

What is the VAT registration threshold?

£90,000. The figure is exact and is set by order — the VAT (Increase of Registration Limits) Order 2024.

It applies to VAT taxable turnover, not to profit, and not to total income. That distinction does more damage than the number itself: a business with modest margins can cross £90,000 of taxable supplies while making very little.

Is the test "£90,000 or more" or "more than £90,000"?

Strictly more than. Schedule 1 paragraph 1(1)(a) of the Value Added Tax Act 1994 is expressed as turnover that has exceeded £90,000.

Turnover of exactly £90,000.00 does not cross the threshold. Turnover of £90,000.01 does. This is not a technicality worth glossing over — a business sitting precisely on the number has not triggered the duty, and a business a penny above it has.

When do I need to register for VAT? (the backward-look test)

At the end of any month in which your taxable turnover for the trailing twelve months has exceeded £90,000.

The trigger is a month end, not the moment of the sale that took you over. You look back over the previous twelve months at each month end; if that rolling total has exceeded £90,000, liability arises at the end of that month. That month is the "relevant month", and everything else counts from it.

What is the VAT registration deadline?

Thirty days from the end of the relevant month — not thirty days from the sale that crossed the threshold.

Schedule 1 paragraph 5(1) requires notification within 30 days of the end of that month. The anchor is the month end, and the count from it is an ordinary forward count of thirty days. So a business whose rolling twelve-month turnover first exceeds £90,000 during, say, a March has until 30 April to notify.

Getting the anchor wrong is the common failure. Counting thirty days from the invoice that tipped the total produces a deadline that is too early — harmless — but counting from the wrong month end entirely produces one that is too late.

What is the forward-look test?

An independent trigger, based on expectation rather than history. Paragraph 1(1)(b) applies where, at any time, there are reasonable grounds for believing that taxable supplies in the period of 30 days then beginning will exceed £90,000.

Two features make it different in kind from the backward-look test. It looks at the next thirty days alone — not at a twelve-month total — so a business with negligible history can trigger it on a single large contract. And it applies "at any time": it is a continuously monitored, prospective judgement, not a month-end calculation.

How is the forward-look deadline counted?

Notification is due before the end of the same 30-day period by reference to which the liability arose — and the day the expectation first arose is day 1 of that period, not day 0.

This inclusive construction is worth spelling out, because it is where an off-by-one error lives. The period of 30 days beginning with the expectation date runs from that date inclusive, so its last day falls 29 days after it, not 30. Treating the anchor as day 0 and adding 30 puts the deadline one day past the real one.

Note that this is a genuinely different day-count shape from the backward-look test, where the anchor is a month end sitting outside the period and a flat thirty-day count is correct.

Can both VAT registration tests apply?

Yes. They are independent alternative routes to liability. Paragraph 1(1) joins them with "or", and nothing in Schedule 1 makes them mutually exclusive.

A business can trigger either, or both, on different dates. Neither test suppresses the other, and clearing one of them says nothing about the other — a point that matters most for businesses with lumpy revenue, which can be nowhere near the twelve-month total while being squarely inside the forward-look test.

When does VAT registration actually take effect?

The two tests produce different effective dates, and this is not a detail — it determines from when you must charge VAT.

• Backward-look: registration takes effect from the end of the month following the relevant month, under paragraph 5(2). Not the relevant month itself. An earlier date can be agreed with HMRC.
• Forward-look: registration takes effect from the beginning of the 30-day period by reference to which the liability arose, under paragraph 6(2) — that is, backdated to the day the expectation arose.

So the forward-look test registers you retrospectively while the backward-look test gives you a further month. Borrowing one test's mechanics for the other is a straightforward way to get the wrong answer on both the deadline and the date from which VAT is chargeable.

What is the penalty for late VAT registration?

A percentage of the potential lost revenue, set by how the failure came about — not by how late the notification was.

The penalty for failing to notify sits in Schedule 41 to the Finance Act 2008. Its standard percentages are behaviour-based (paragraph 6(2); a VAT failure is a category 1 failure under paragraph 6A(1)(b)(ii)):

The same regime applies whichever paragraph 1(1) route triggered the liability. Schedule 41's table names paragraphs 5, 6, 7 and 14(2)–(3) of Schedule 1 to VATA 1994 together, so the penalty attaches to the failure to notify, not to which test caught you.

How is potential lost revenue calculated?

It is the VAT, if any, for which you are liable over the period beginning on the date with effect from which you were required to be registered and ending on the date HMRC received notification of — or otherwise became fully aware of — your liability to be registered. That is paragraph 7(6)–(7)(b).

The window opens at each route's own effective date of registration, and the two tests do not open it on the same day:

• Backward-look: from paragraph 5(2)'s effective date — the end of the month following the relevant month.
• Forward-look: from paragraph 6(2)'s effective date — the beginning of the 30-day period by reference to which the liability arose.

On the forward-look route the exposure window therefore opens earlier, on otherwise identical facts about when you notified.

Can the penalty be reduced?

Yes. HMRC must reduce the standard percentage to reflect the quality — the timing, nature and extent — of a disclosure, under paragraphs 12 and 13, subject to the minima paragraph 13 sets. A disclosure is either unprompted or prompted, and for the 30% standard percentage the minimum also turns on which of two cases applies: case A, where HMRC becomes aware of the failure less than 12 months after the tax first becomes unpaid, or case B.

A non-deliberate failure disclosed unprompted in case A can be reduced to nil. The reduction is not a concession — HMRC must make it — but its size depends on the quality of what you disclose.

Is there a minimum penalty?

No. Schedule 41 sets no floor. The £50 minimum belonged to section 67(8) of VATA 1994 and did not survive into Schedule 41 — see What changed recently? below.

Is there a defence for late VAT registration?

Reasonable excuse, and only for a non-deliberate failure (paragraph 20). Three limits sit on the face of it: an insufficiency of funds is not a reasonable excuse unless attributable to events outside your control; reliance on another person is not one unless you took reasonable care to avoid the failure; and where an excuse has ceased, it is treated as continuing if the failure is remedied without unreasonable delay.

Is there an extension to the VAT registration deadline?

No. Paragraph 5 states a thirty-day period and provides no extension mechanism, no application route and no discretionary deferral.

The one place HMRC agreement does appear is a different thing entirely: paragraph 5(2) allows an earlier effective date of registration to be agreed. That concerns when registration starts, not when notification is due, and it cannot be used to push the notification deadline back.

What changed recently?

Two things, one of them a good deal longer ago than "recently" suggests.

The threshold figure. £90,000 is set by the VAT (Increase of Registration Limits) Order 2024 — a change to the number, not to the mechanics. The two tests in paragraph 1(1), the notification periods in paragraphs 5 and 6, and the effective-date rules are unchanged by it.

The penalty regime, on 1 April 2010. Section 67 of VATA 1994 previously charged a belated-notification penalty banded by lateness — 5%, 10% or 15% of the VAT due, subject to a £50 minimum. It was repealed by section 123(2) of, and paragraph 25(f) of Schedule 41 to, the Finance Act 2008, commenced by S.I. 2009/511 article 2, and was omitted from the current consolidated text; article 4(a)(ii) preserves it only for failures arising before commencement. For any failure to notify arising on or after 1 April 2010 the Schedule 41 percentages set out above are the regime — the lateness bands and the £50 floor were superseded and no longer apply.

How do I register for VAT?

By notifying HMRC of the liability within the applicable period above. What matters for the deadline is the notification, and the practical work sits earlier than that: you cannot notify on time unless someone is actually computing the rolling twelve-month total at each month end, and forming a view at any point when the next thirty days look unusually large.

Related

• VAT return — the recurring obligation that starts once you are registered
• Pay corporation tax · Company tax return (CT600) — the other HMRC deadlines on your accounting period
• Pillar hub: UK VAT obligations (placeholder)
• Companies House deadline checker — your company's filing deadlines alongside the tax ones