Commentary

V2.143 Liability to registration—determination of value of taxable supplies

Part V2 Registration – deregistration

V2.143 Liability to registration—determination of value of taxable supplies

V2.143 Liability to registration—determination of value of taxable supplies

Valuation of supplies for the purposes of the liability to register

EU legislation

The UK legislation (see below) is derived from Directive 2006/112/EC, art 286. This allows the UK to apply a higher than standard threshold for VAT registration. In determining the reference level for registration, Directive 2006/112/EC, art 288 requires the following amounts (exclusive of VAT) to be taken into account:

  1.  

    (1)     the value of taxable (including zero-rated) supplies

  2.  

    (2)     the value of real estate transactions, financial transactions as referred to in points (b) to (g) of Directive 2006/112/EC, art 135(1), and insurance services, unless those transactions are ancillary transactions. However, disposals of the tangible or intangible capital assets of an enterprise shall not be taken into account for the purposes of calculating turnover

but excluding disposals of the tangible or intangible capital assets of an enterprise.

It should be pointed out that (2) above does not appear to be applied in the UK. However, the Advocate-General1 has considered that exempt letting transactions fell within the bracket of real estate transactions. As to how to determine whether a letting transaction is 'ancillary' (and hence excluded from the turnover calculation), she noted that the CJEU has not previously determined the requirements. In her view, for a transaction to be ancillary it should not have a close link to the actual taxable activities of the taxable person. A close link would not exist where the transactions either 'constitute non-recurring, exceptional acts beyond the

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