Save content
Have you found this content useful? Use the button above to save it to your profile.
Close-up of green emergency exit light sign
istock_cruphoto_aw

VAT registration: Tips for deregistration

by

In the final article of this series on VAT registration, Neil Warren highlights some potential tips and pitfalls with deregistration.

4th Sep 2017
Save content
Have you found this content useful? Use the button above to save it to your profile.

Reasons for deregistering

A business will always deregister for one of two reasons:

1. Compulsory deregistration

The business has ceased to trade and has no intention of making future taxable sales. The deregistration date is the final day of trading, although there is scope on the deregistration form VAT7 to extend this date and therefore capture some final purchase invoices for input tax purposes, eg in relation to professional fees.

2.Voluntary deregistration

The business expects that its taxable sales in the next 12 months will be less than the deregistration threshold, ie £83,000, which has been the relevant figure since 1 April 2017. This is the key point with voluntary deregistration, namely that historic turnover is irrelevant and it is always about future sales.

Remember that voluntary deregistration can only be requested from a current or future date: it can’t be applied for on a retrospective basis (VAT Notice 700/11, para 3.4).

Example 1

Register for free to continue reading

It’s 100% free and provides unlimited access to the latest accounting news, advice and insight every day. As well as access to this exclusive article, you can:


Content lock down, tick icon

View all AccountingWEB content


Content lock down, tick icon

Comment on articles


Content lock down, tick icon

Watch our digital shows and more

Access content now

Already have an account?

Replies (4)

Please login or register to join the discussion.

avatar
By Fitzz
06th Sep 2017 11:23

I have a position where a service business normally has 2/3 client contracts in a year but these expired and, although the intention was to win more business, it did not do so. We are now 6 months on and the decision has been made to close down. When did the company cease to trade for VAT purposes? Were they right to claim input tax on (fairly minimal) activities in the 6 months?

Thanks (0)
avatar
By plwwolvo
06th Sep 2017 11:51

I am the trustee of a cricket club .I 2007 we sold some land andwith the proceeds built a new clubhouse £350k , on which we recovered VAT on the various inputs .We have drink stocks of c.£2.6k.Our turnover is less than £80k fora few years .If we deregistered would we pay VAT on the value of the clubhouse + stocks or is there any time limit as the building was built 10 yeares ago
Any help appreciated

Thanks (0)
avatar
By AndrewV12
06th Dec 2018 10:11

I always thought if you held stock and assets for over 10 years there was no additional vat to pay on desegregation.

Thanks (0)
avatar
By MegaMatts
16th Jan 2020 16:11

Many thanks for this article Neil

Your advice on voluntary deregistration seems very clear cut (although having read numerous articles and forums I now know VAT is an absolute mine field!!!) however, despite planning to remove 2 staff and closing 1-2 days a week from February, our accountant says HMRC are extremely unlikely to approve our deregistration request until 4 consecutive VAT returns show cumulative reported sales below the threshold....

His recommendation is that we submit our Q4 VAT in March (which will show 12mth sales modestly in excess of the threshold) and that we draw HMRC's attention to the fact our latest two quarters sales were lower and will remain such over the next 12mths due to a restructure/downsizing.

This contradicts your advice but it is his experience that the majority of deregistration requests get declined until the 12mths cumulative sales fall within the threshold (which is absolutely mad!!). Has HMRC's approach changed in the 2yrs since your article was published??

Thanks

Thanks (1)