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HMRC internal manual

VAT Registration

Failure to notify liability for registration and belated notification: evidence to support liability arising by reference to past turnover

Establishing monthly turnover figures

When you are gathering evidence to support registration, it needs to show the value of taxable supplies for each month prior to the alleged date. This is because liability to register is calculated on a rolling monthly basis. If

  • the information you have is not broken down into monthly totals (for example, you may be working from a direct tax annual declaration), and
  • you have not been able to get information about the monthly totals from the trader

you will need to use a reasonable method to attribute the turnover to individual months. You will probably want to keep a record of the methodology you used in case the new EDR is appealed to the First Tier Tribunal.

Tax points

Prior to registration, invoices can not establish a tax point so invoice dates can not be used in determining taxable turnover and the EDR. The tax point is the earliest of:

  • the date goods were removed or made available
  • the date a service was performed
  • the date a payment was received (to the extent covered by the payment).

In the case of continuous supplies, the date of receipt of payment is the tax point, to the extent covered by the payment. It is unlikely that most businesses would keep the type of records necessary to establish the true tax point and, in practice, the date of invoices can form a convenient method of determining turnover and the EDR. There are unlikely to be many problems caused by adopting this practical approach, but you do need to be aware of the legal position.

Other types of evidence suitable for determining liability

(a) A reconstructed record of the amounts and times of the supplies, signed by the trader as being a true schedule of activities.

If possible, the schedule is to be endorsed as follows:

‘I agree that this schedule is a true record of my trading during the period from …………………….. to ……………………..


(b) Records of amounts paid into a bank account with comments by the trader showing that

  • the account was only used for business purposes, or
  • any other sums paid in can be clearly identified.

The following must also be confirmed:

  • whether the amounts banked were the gross or net proceeds of the business
  • the dates when the amounts were banked, and whether this followed a pattern (for example, regular daily or weekly banking), or
  • that there is a clear relationship between the time of banking and the time of supply of goods or services.

If possible, the schedule prepared from the above information is to be endorsed in the manner described at (a).