MACSPIN (PTY) LTD, dis not registered as a VAT vendor because management was of the opinion that because they are manufacturing and producing mixture of taxable and exempt supplies in that ratio of 40% to 60% - management was of the opinion that because the major composition of the production output represented exempt supplies there was no need to register. The financial manager stated that the company had the highest mark-up on the taxable supplies resulting in the revenue of the company consisting of approximately 75% of the total revenue for the reporting period. However, the companys revenue in prior periods never exceeded the threshold for compulsory registration, but during the current reporting the revenue for the year amounted to R 3.8 million. The company stated that it may be challenging to determine the exact date when the threshold was exceeded and that there is no guarantee that the future revenue will exceed the threshold, therefore management should assess the performance during the first quarter before making final decision to registered for VAT purposes. Required:

(a) Advise management whether the argument can be used that the company does not have to registered because the major proportion of its production output comprises of exempt supplies.

(b) Discuss whether that company can refuse to register for VAT purposes when its revenue exceeded the threshold because there is uncertainty whether it will be maintained in future years.

(c) Discuss the consequences of management register for VAT purposes when the threshold is exceeded.