There may come a time when you no longer need to be VAT registered. In such cases, you must undergo the process of deregistration for VAT. Here are the different situations in which you may need to deregister for VAT:
Reasons for deregistration for vat
There are various reasons why you may need to deregister for VAT. Some common reasons include stopping trading or making VAT taxable supplies, joining a VAT group, or no longer meeting the criteria for VAT registration.
deregister within 30 days
If you no longer meet the criteria for VAT registration or are no longer eligible to be VAT registered, you must apply for deregistration for VAT within 30 days. Failure to do so may result in penalties from HMRC.
Deregistration if VAT taxable turnover falls below £88,000
If your VAT taxable turnover falls below £88,000 and you are not based outside the UK or supplying goods or services to the UK, you can ask HMRC to cancel your VAT registration. However, if any of these conditions apply, you must continue to be VAT registered.
Automatic cancellation with EORI number
If you have an Economic Operators Registration and Identification (EORI) number and your VAT registration is cancelled, HMRC will automatically cancel your EORI number as well. This means that you will no longer be able to use associated authorizations or licenses.
When deregistration for VAT is not required
There are certain situations in which you do not need to deregister for VAT. These include changing the legal status or selling a business and wanting to keep the same VAT registration number, closing down a single company in a VAT group, joining a VAT group, or creating a new VAT group.
Transfer your registration
In some cases, you may need to transfer your VAT registration to another entity. Here are the different situations in which you may need to transfer your VAT registration:
Transferring VAT registration number
If you are changing the legal status of your business or selling a business but want to keep the same VAT registration number, you must transfer your registration to the new entity. This ensures that you can continue using the same VAT registration number for your business.
Closing down a company in a VAT group
If a single company within a VAT group is closing down, you must complete a VAT50-51 form to change your VAT group. This ensures that the VAT group is updated with the changes and that the appropriate VAT registrations are maintained.
Joining a VAT group
If you are joining a VAT group, you must complete a VAT50-51 form to notify HMRC of the changes. This ensures that the VAT group is updated and that your VAT registration is transferred to the VAT group.
Creating a new VAT group
If you are creating a new VAT group, you must register for VAT and complete a VAT50-51 form to notify HMRC. This ensures that the new VAT group is established and that all necessary VAT registrations are in place.
Cancel online
If you need to cancel your VAT registration, you have the option to do so online. Here’s what you need to know:
Requirements for online cancellation
To cancel your VAT registration online, you must meet certain requirements. These include no longer trading and not being part of a VAT group, having a VAT taxable turnover below £88,000, no longer making VAT taxable goods or services, or applying for an exemption if most or all of what you sell is VAT zero-rated.
VAT deregistration for traders not part of a VAT group
If you have stopped trading and are not part of a VAT group, you can cancel your VAT registration online. This allows you to quickly and easily notify HMRC of your cancellation.
Cancellation for VAT taxable turnover below £88,000
If your VAT taxable turnover falls below £88,000 and you are not based outside the UK or supplying goods or services to the UK, you can cancel your VAT registration online. This is a convenient way to inform HMRC of your eligibility for cancellation.
Cancellation for VAT zero-rated goods or services
If you are applying for an exemption because most or all of what you sell is VAT zero-rated, you can apply for deregistration for VAT online. This ensures that you are no longer required to charge VAT on your sales.
Cancel by post
If you are unable to apply for deregistration for VAT online or prefer to do so by post, here’s what you need to know:
Requirements for cancelling by post
To deregister for VAT by post, you must meet certain requirements. These include a change in your legal status and a need for a new VAT registration number, selling your business and the new owner not keeping the same VAT registration number, or disbanding a VAT group.
Situations when cancellation by post is necessary
If you are facing any of the situations mentioned above, you must deregister for VAT by post. This ensures that HMRC has the necessary information and can process your cancellation correctly.
Completing form VAT7
To deregister for VAT by post, you must complete form VAT7. This form captures the relevant information and details of your cancellation. Make sure to fill it out fully and accurately before attempting to print it.
Submitting the completed form to HMRC
Once you have completed form VAT7, you must submit it to HMRC by post. The address to send it to is provided on the form. Make sure to follow the instructions carefully and include any other completed forms, if required.
What happens next
After you have applied to deregister for VAT, here’s what you can expect:
Confirmation of VAT deregistration
Once you have submitted your VAT deregistration request, it usually takes HMRC around 3 weeks to confirm your cancellation. They will send a confirmation message to your VAT online account or through the post if you did not apply online. This message will confirm the official VAT deregistration date.
Official VAT deregistration
The official deregistration date is either the date when the reason for your cancellation took effect, such as when you stopped trading, or the date you requested to cancel. This is an important date to note as it marks the end of your VAT registration and your obligation to charge VAT.
Ceasing VAT charges
From the date of deregistration for VAT, you must stop charging VAT on your sales. This means that you will no longer add VAT to the price of your goods or services. It’s important to update your systems and processes accordingly to ensure compliance.
Retention of VAT records
Even after your VAT registration is cancelled, you must keep all relevant VAT records for 6 years. This includes invoices, receipts, and any other documents related to your VAT transactions. HMRC may request these records for auditing purposes.
Re-registration by HMRC if required
In some cases, HMRC may realize that you should not have cancelled your VAT registration and may re-register you. If this happens, you will need to account for any VAT you should have paid during the period of cancellation.
VAT after you cancel
After you have cancelled your VAT registration, there are a few things you need to be aware of:
Submitting final VAT Return
You will need to submit a final VAT Return for the period up to and including the deregistration date. This Return should include any VAT owed or due for this period.
Accounting for stock and assets
If you have claimed VAT on any of the remaining stock or assets and the total VAT due on these is over £1,000, you must account for this in your final VAT Return. Make sure to carefully calculate and include any VAT due.
Submission deadline for final return
The final VAT Return must be submitted within one month of the date of deregistration for VAT, unless you are on the Cash Accounting Scheme. If you are on the Cash Accounting Scheme, you have two months from the deregistration date to submit your final Return.
Reclaiming VAT on invoices received after cancellation
If you receive any invoices after your VAT registration is cancelled, you may still be able to reclaim VAT on these invoices. Make sure to keep track of any invoices received and follow the necessary procedures to reclaim VAT if applicable.
