Deregister for VAT

At The VAT People, our specialist consultants can assist with the VAT de-registration process with minimal fuss and complication. Deregistering from VAT is an important step if your business is no longer eligible to be VAT registered, and we understand the intricacies involved in ensuring a smooth VAT deregistration process.

If your business is no longer meeting the requirements to be VAT registered, or if your VAT taxable turnover falls below the deregistration threshold (and you wish to no longer be registered), it is essential to cancel your VAT registration. This process, while generally straightforward, requires careful consideration of several key points. To underpin this, you must maintain accurate VAT records, to avoid potential pitfalls and additional costs that you might otherwise incur.

Our team has decades of experience in assisting businesses and organisations with all aspects of VAT, including the VAT deregistration process. We are committed to simplifying complex tax regulations, to ensure that managing your company's VAT obligations is hassle-free.

Contact us to discuss your VAT deregistration needs by calling 0161 477 6600, or fill out an online enquiry form and we will be in touch.

How we can help you with VAT registration

The VAT People provides comprehensive support for businesses looking to can their VAT registration process, and covers all necessary steps and considerations, such as:

• Determining the right time to deregister 
• Understanding the differences between voluntary and compulsory VAT deregistration
• Navigating the VAT deregistration procedure via your VAT online account
• Assessing the VAT implications on assets held at the time of deregistration
• Preparing for the changes following VAT deregistration

We ensure that your VAT deregistration process is handled efficiently, taking into account your business's specific circumstances and the latest tax regulations.

Efficient VAT Deregistration after Ceasing Taxable Activities

If your business ceases taxable activities, you must promptly notify HMRC and initiate the VAT de-registration process within 30 days of becoming ineligible, or a financial penalty may apply. 

Maintaining VAT registered status is acceptable if you still have stock to sell post-trading cessation. Ensure your VAT deregistration is timely and compliant to prevent penalties under Section 69 of the VAT Act 1994.

For assistance with VAT deregistration, particularly if you are dealing with remaining stock, contact our team. We'll ensure your VAT deregistration is handled correctly, to keep your business compliant with VAT registration requirements.

FAQs on being VAT registered

Why must a business deregister for VAT?

There are many reasons why a business make seek to cancel its UK VAT registration, for example if it ceases to make taxable supplies, or was an intending trader but the intention to make taxable supplies no longer exists. Likewise de-registration can be sought if your business is being taken over as a transfer of a going concern, and the purchaser does not wish to keep the existing VAT registration number, or on the dissolution of a VAT group.

A business is permitted to deregister from VAT if it can prove to HMRC that taxable turnover in the next 12 months will not exceed the deregistration threshold, which currently stands at £88,000. While supplies of capital assets can be emitted from this threshold, positive-rated supplies of land and buildings must be included. Please note this threshold does not apply to non-established taxable persons which intend to continue making supplies in the UK.

Often, satisfying HMRC of reduced taxable turnover levels can be difficult.

How are assets in hand treated if you cancel your registration?

The treatment of assets in hand is one of the most commonly misunderstood areas of deregistration. During this process, VAT must be accounted for on tangible assets in hand, whereas intangible assets, such as goodwill, are excluded, where the VAT due would exceed £1,000.

Therefore, the VAT-inclusive value would need to be £6,000 or more if all the assets were standard-rated with VAT at 20%. It is important to include any relevant assets previously acquired in a transfer of a going concern, even though no VAT would have been charged at the time.

The assets may be excluded if VAT was not deductible on their original purchase. For instance, cars, goods for business entertainment, land/property that had not been opted to tax and any goods wholly used for exempt activities may be removed from this calculation.

When should I consider deregistering for VAT?

You should consider deregistering for VAT if your business’s taxable turnover falls below the VAT deregistration threshold, currently £88,000, or if you stop making taxable supplies. If you anticipate that your business will not exceed this threshold in the next 12 months, initiating VAT deregistration could be a beneficial move. Additionally, if there are significant changes in your business structure or operations, such as ceasing trading or changing the legal entity, you may need to deregister for VAT.

What is the VAT taxable turnover, and how often does it change?

The VAT registration threshold is the annual amount of taxable turnover (in a rolling 12 month period) beyond which a business must be VAT registered. As of now, this threshold stands at £88,000. However, the VAT registration threshold can change. It is determined by the government's financial policies, which is typically reviewed and possibly adjusted during the annual Budget announcement. Businesses should stay informed about changes to ensure they maintain compliance with VAT registration requirements.

How do I initiate the VAT deregistration process?

To initiate the VAT deregistration process, you must log in to your VAT online account and complete the relevant sections to inform HMRC of your intention to deregister. It's essential to provide accurate information regarding your reasons for deregistration and to confirm that your taxable turnover has fallen below the threshold or that you are no longer making taxable supplies. Ensure all outstanding VAT returns are submitted and any due VAT is paid before deregistering.

What are the implications of deregistering for VAT on my business?

Deregistering for VAT means you will no longer charge VAT to your customers, which could make your pricing more competitive. However, you will also lose the ability to reclaim VAT on business expenses. VAT deregistration may impact your pricing, accounting systems, and how you manage business finances. It’s important to assess how this change will affect your business operations and financial health. The VAT People specialise in helping businesses deregister with minimum fuss or disruption to your business operations.

Are there specific forms or documents required for VAT deregistration?

Yes, specific forms are required to deregister for VAT. Typically, you will need to complete a VAT7 form, available through your VAT online account, or request a paper version from HMRC if necessary. You must provide accurate business details, reasons for deregistering, and the date of deregistration. Ensure that all required sections are completed to avoid delays.

How long does the VAT deregistration process take?

The VAT deregistration process typically takes around three weeks from the date HMRC receives your completed application. However, this timeframe can vary depending on the specifics of your case and HMRC’s workload. Once the process is complete, HMRC will confirm your VAT deregistration and the effective date of deregistration.

Can I reclaim VAT on assets and stock when deregistering for VAT?

When deregistering for VAT, you may be able to reclaim VAT on consumable goods/services if they were purchased while you were VAT registered and used to make supplies on which VAT was accounted for. This can be done as part of your final VAT return. However, you must account for output VAT on assets you still have on hand at the point of deregistration if their total value exceeds a certain limit. Understanding the rules regarding VAT recovery on assets and stock at the point of deregistration is crucial.

Are there any penalties for errors in the VAT deregistration process?

Yes, there can be penalties for errors in the VAT deregistration process, especially if you provide incorrect information or fail to account for VAT due on assets at the time of deregistration. These are fundamentally the same penalties that might apply under any circumstances in which you do not pay the correct amount of tax. To avoid penalties, ensure all information is accurate and complete, and seek advice if you are unsure about any part of the process.

How does VAT deregistration affect my ongoing record-keeping and tax obligations?

After you deregister for VAT, you must continue to keep business records for a certain period, typically six years, even though you no longer need to maintain VAT records or submit VAT returns. However, you should still track your taxable turnover to ensure it remains below the VAT registration threshold, as you may need to re-register for VAT if it exceeds the current threshold. 

What happens if my application to deregister for VAT is refused?

If the Commissioners do not approve your VAT deregistration application, you remain VAT registered and must continue to account for VAT as per standard requirements. This situation is outlined in Notice 700/11 Cancelling Your Registration. If your request to deregister for VAT is declined, it's crucial to understand your ongoing obligations to account for VAT and ensure compliance with current VAT registration rules.

When is VAT deregistration typically allowed?

VAT deregistration is permitted when it's confirmed that ending your VAT registration is appropriate. If approved, your VAT registration is cancelled from the date you requested or a mutually agreed later date. However, an earlier deregistration date than requested is not allowed if you still qualify to be VAT registered. Understanding when you can apply for VAT deregistration and ensuring your business meets the criteria for cancellation is essential for smooth processing.