Exceeding VAT threshold

[Lizzie]

I had a hand delivered letter from Hidden Economy Team enquiring why I as a sole trader in the construction industry am not VAT registered. I had to submit three years of accounts. The VAT officer has informed me that I exceeded the threshold in 2005 by approx £300.He estimates that I was in the bracket for nine months. He wants a meeting. My accountant has recalled accounts for a double check etc. Has anyone any advice as to what I am looking at? Also, why is a meeting necessary? It is a genuine error on my part, if correct. I deliberately try to keep my earnings below VAT even turning away work if necessary. Any advice would be very much appreciated as the entire episode has caused much stress and sleepless nights!

[jpcentral]

Quote from VAT 700-01:

"If at the end of any month the value of your taxable supplies for the last 12 months has gone over the registration threshold, but you can provide evidence and explain why the value of your sales will not go over the deregistration threshold in the next 12 months, then you may not have to register unless you are required to do so because of the level of your distance sales or acquisitions. This is called exemption from registration."

Your problem may be that your sales for the second year fell between the registration and deregistration limits, otherwise you could argue that you knew that your turnover would be below the threshold and the above exemption applied.

John Perry
Central Business Services
Loughborough
www.centralbusiness.co.uk

[Lizzie]

Thank you for your reply. I have forwarded this information onto my accountant. Thanks again.