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VAT Registration and Backdated Deregistration?

Compulsory backdated registration t/o >£85k, but <£83k thereafter. Can we backdate deregistration?

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Client company's rolling monthly t/o exceeded £85k during 2017, so must back-register for VAT. How likely are HMRC to allow a backdated VAT deregistration for (say) mid-2018 (from which point t/o drops permanently to below the £83k de-reg threshold)? It seems to me that, given the 4 year backdate on voluntary registration, the Revenue might just take the same relaxed view over backdating deregistrations. But the VAT helpline won't be drawn on that.

Sub-question, but last time I had a client compulsarily back-register for VAT then HMRC very kindly allowed VAT inputs to be reclaimed from the (back)-registration date. That was some 20 years ago; but is that still a possibility / probability? At this stage, I'm simply wondering whether to post net (of VAT) expenditure to the (long overdue) accounts / CT600.  

All opinions gratefully received.


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22nd May 2019 14:24

There is an exception from mandatory registration when turnover is only expected to temporarily exceed the threshold - see at bottom of page:

Thanks (1)
to paul.benny
22nd May 2019 15:13

Cheers Paul,

Good steer, except I'm afraid that we might be stretching "temporarily" in this particular case as the t/o <£85k was in y/e Aug 2017 and didn't subside until mid-2018 - ie the best part of a year (and possibly longer, as I'm just currently doing the rolling monthly numbers on y/e Aug 2017 and suspect they may well have exceeded the threshold mid-year).

Interesting HMRC example on your link, of rolling monthly t/o:

"Between 10 July 2017 and 9 July 2018 your VAT taxable turnover was £100,000. That’s the first time it has gone over the VAT threshold. You must register by 30 August 2018. Your effective date of registration is 1 September 2018."

You'd be excused for thinking that the rolling 12 month aggregations must be done on a daily basis, given the mid-month dates in the Revenue's example. I've already tackled the VAT helpline regarding that misleading example, and they tell me they still work it on a calendar month basis (ie the last day of each month; so that you need 12 separate calcs to determine the registration datre; not separate 365 calculations). They agree the example is pants, as it implies otherwise.

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22nd May 2019 15:54

You cannot back-date the de-registration but when you register make it clear that it is a LNLL case and give the date that you would have been able to de-register from had you been registered.

That will limit the period of registration in the same way as a back-dated de-reg.

Thanks (1)
to Jaydee UKBF
23rd May 2019 13:05

So liable for circa 12 months until mid-2018, and not liable thereafter. Good thinking, Jaydee - thank you.

It does seem rather odd that HMRC may allow voluntary registrations to be backdated by up to 4 years, but not de-registrations. Still, LNLL is a great alternative way to skin this cat.

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23rd May 2019 12:13

Had a hobby business, came to me when HMRC spotted trading levels well over the limits on Ebay. They allowed us to do summaries to determine the period he was over the threshold and prepare return calcs for just that period, effectively allowing retrospective de-registration. We were able to claim inputs over that period too. Had another one with more mess and we ended up flat rate scheming it to keep it simple.

Thanks (1)
to accountantccole
23rd May 2019 13:16

That sounds promising - so LNLL but with inputs allowed. I'd had inputs allowed the last time I did this, but that was last century before the VAT Office were swallowed by HMRC. Relieved to hear they still have a heart - thank you for sharing, ccole.

FRS sounds a good option - especially as this client is a racing certainty to have lost many of his purchase invoices. Good call.

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