VAT Deregistration

Deregistering a client - more guidance required

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My client wants to de-register.  He bought licenced premises and re-claimed around £94,000 input tax a year ago.  The idea was to let the premises and charge VAT (Partial Exemption) on the rental.  This was all approved by the VAT  office.  However, the rental income has never happened so all VAT returns since that date have been zero - inputs and outputs.  When reading the legislation, well actually HMRC's guidance, I came accross this:-

"You’ll have to submit a final VAT Return for the period up to and including the cancellation date. You must account for any stock and other assets you have on this date if:
•you could reclaim VAT when you bought them
•the total VAT due on these assets is over £1,000"

They obviously still have the asset (the licenced premises) so does this indicate that the initial VAT reclaimed will have to be repaid?

I have never noticed this when de-registering a client before, but I have never had such large sums involved with stock and/or assets.

Thank you.

  

Replies (4)

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RLI
By lionofludesch
11th May 2020 14:50

Not sure what you mean by ".... charge VAT (Partial Exemption) ...." Is that to reflect the domestic accommodation ?

But, yes, prima facie, it looks like it'll cost £94,000 or thereabouts to deregister.

What are the client's revised plans for the property ?

Thanks (1)
avatar
By The Accountant
11th May 2020 15:05

Yes - for the domestic accommodation 10%/90%
Plans are still the same, but due to The Virus, the premises are currently not trading and the tenants are not being charged rent.
Thank you for clarifying that for me. Not going to de-register then, although I do believe it is within HMRC's remit to force de-registration if a company can be seen to not be trading.

Thanks (0)
Replying to The Accountant:
RLI
By lionofludesch
11th May 2020 15:10

I reckon it'd be tough for HMRC to justify that in the present circumstances.

Thanks (1)
chips_at_mattersey
By Les Howard
11th May 2020 20:49

If you have opted to tax, the deemed Supply on deregistration May be substantial. Be careful.

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