What criteria does HMRC consider when determining if a partnership should register for VAT?

When HMRC determines whether a partnership must register for VAT, the key factor considered is the level of taxable supplies made by that partnership. Specifically, if the cumulative taxable turnover of the partnership exceeds the VAT registration threshold, which is currently set at £85,000, registration for VAT becomes mandatory. This threshold is measured over a rolling 12-month period, meaning that if the total taxable supplies made by the partnership in that period exceed the specified limit, it must register.

Having a significant turnover indicates that the partnership is engaging in substantial business activities that warrant VAT registration, allowing them to collect VAT on their sales and potentially reclaim VAT on their business expenses. While other factors such as number of employees or physical presence may inform a partnership's business model or size, they do not directly affect the VAT registration requirement. Additionally, average monthly expenses do not determine registration, as VAT registration is fundamentally linked to income rather than outgoings.