What is a VAT Exception?

Understand what a VAT exception is, which businesses are eligible to apply for one and how to request this from HMRC.

Friendly Disclaimer: Whilst I am an accountant, I’m not your accountant. The information in this article is legally correct but it is for guidance and information purposes only. Everyone’s situation is different and unique so you’ll need to use your own best judgement when applying the advice that I give to your situation. If you are unsure or have a question be sure to contact a qualified professional because mistakes can result in penalties.

1. What is a VAT Exception?

A business can avoid registering for VAT if their VAT business turnover temporarily goes over the VAT threshold by applying for a VAT exception.

2. How to Apply for a VAT Exception

A business seeking to apply for a VAT exception must get approval from HMRC by writing to them and providing evidence that their VAT taxable turnover will not go over the de-registration threshold of £83,000 in the next 12 months.

HMRC will consider their request for an exception from VAT registration and write back confirming if they agree. If they don’t agree, then they will require a compulsory VAT registration.

A business can write to this address to apply for a VAT exception:

BT VAT
HM Revenue and Customs
BX9 1WR

Related:

Taxes are changing! From April 2024 sole traders will need to report their earnings and pay tax on a quarterly basis. This is known as Making Tax Digital, which you can read more about in this guide to help you get prepared.

About Anita Forrest

Anita Forrest is a Chartered Accountant, spreadsheet geek, money nerd and creator of www.goselfemployed.co - the UK small business finance blog for the self-employed community. Here she shares simple, straight-forward guides to make self-employment topics like taxes, bookkeeping and banking easy to understand.