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Claim Vat then deregister

Claim Vat then deregister


If a newly formed company registers for vat and then claims back a large amount of input tax on some large setup costs, what is then stopping the company from de-registering again?

The company is not going to be over the threshold at any point and it would be in the interest of the company not to be vat registered generally..

I'm sure there must be a rule to stop this, I just can't find it.

Any help would be appreciated.




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21st Jan 2013 19:30

You repay the VAT you reclaimed

If the VAT on current stocks/assets comes to £1,000 or more, you have to repay the VAT.


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21st Jan 2013 20:38

it can be done

Note that the VAT is on the market value on the date of de-registration of those assets.  So in cases where much of the VAT claimed is on services, or where the market value of the assets on de-registration is £6,000 or less, this can be a worthwhile plan.

Expect to have to produce some convincing documentation if the VAT claimed in the meantime is material and there is not a lot of output tax being handed over.


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21st Jan 2013 21:36

It depends what the costs incurred are... If they are assets on hand at the time of de-registration you must assess the Market Value of those assets. If the VAT chargeable at the prevailing rate (probably 20%) on those assets is over £1,000 then you must repay that amount.


This is vague guesswork based upon your supposition that the Company will not exceed the threshold agian, but I would also consider whether or not the Company's activities are tantamount to a business. If they are not then input VAT cannot be deducted as it is not in the course of furtherance of business.




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