Can I get out of registering for VAT if I’ve only crossed the threshold once?
A large one-off project or unusually busy month can be great news for your business. But if it pushes your taxable turnover above the VAT registration threshold, it can also create an unexpected question:
Do I now need to register for VAT?
The short answer is usually yes.
However, if the increase is genuinely temporary, HMRC may agree that you do not need to register.
Here is how it works.
When must you register for VAT?
The current VAT registration threshold is £90,000. You must normally register if:
- Your total taxable turnover for the previous 12 months goes above £90,000; or
- You expect your taxable turnover to exceed £90,000 within the next 30 days.
Your taxable turnover includes everything you sell that is not VAT exempt or outside the scope of VAT. This means zero-rated, reduced-rated and standard-rated sales can all count towards the threshold.
It is also a rolling calculation, not something you check only at the end of your financial year. Your business should review its taxable turnover at the end of every month.
What if it was only a one-off increase?
Perhaps you secured an unusually large contract, sold a business asset or experienced a short-term spike in sales. Your turnover has crossed the threshold, but you are confident it will return to its normal level.
HMRC provides a route called an exception from VAT registration for situations like this.
You may be able to apply if:
- Your taxable turnover exceeded the £90,000 registration threshold during the previous 12 months; and
- You can show that your taxable supplies will remain below the £88,000 VAT deregistration threshold over the following 12 months.
The exception is not automatic. You must apply to HMRC and provide enough evidence to support your forecast.
How do you apply?
You will need to contact HMRC and request forms VAT1 and VAT5EXC. You must complete and return both forms, explaining why the increase was temporary and why you expect your turnover to fall below the deregistration threshold.
Useful evidence could include:
- Sales forecasts
- Details of the one-off contract or transaction
- Previous turnover figures
- Confirmation that the work will not be repeated
- Information about changes affecting future sales
HMRC says it will normally respond within 40 working days. If your application is accepted, you will not be registered for VAT. If it is refused, HMRC will use the information from your application to register the business, and VAT may be due from the date your liability began.
Don’t ignore the deadline
If your taxable turnover exceeds the threshold under the rolling 12-month test, you normally need to register within 30 days of the end of the month in which you crossed it.
Registering late can leave the business responsible for VAT on sales made from the date it should have been registered. There may also be a penalty, depending on how late the registration is and how much VAT is owed.
That is why it is important to act quickly, even if you believe the increase was temporary.
What happens after an exception is granted?
An exception does not mean your business is permanently outside the VAT system.
You must continue checking your taxable turnover every month. If you cross the registration threshold again, you may need to register or submit another application for an exception.
Good bookkeeping makes this much easier. With accurate, up-to-date information in Xero, you can monitor turnover as it grows and identify a potential VAT issue before it becomes an unwelcome surprise.
If your turnover is getting close to the threshold—or has recently crossed it—it is worth checking the position early. A quick conversation with the Satori team can help you understand what the numbers mean and what you may need to do next.
VAT thresholds and application details checked against current HMRC guidance on VAT registration and exceptions from registration Sept 2026