De-registering for VAT

De-registering for VAT

When you want to de-register from VAT there is a certain criterion that you must meet:

  • Your sales in the last 12 months must be below the VAT Threshold for the last rolling 12 months or 4 VAT returns if you submit these quarterly.
  • If you have ceased trading, then the application will be approved as only trading businesses can register for VAT.

You will need to go to your VAT account on the government gateway and make the application, if you do this online then you will automatically see that this has been submitted successfully.

Any messages relating to this will appear in the messages section of the gateway and you can download the de-registration confirmation for your records.

If you decide to do this by paper and complete the form and send it to the VAT re-registration unit then you should be sending this recorded delivery to ensure they receive this and process this.

By sending this by recoded delivery is you only way to prove you sent this.

Business Assets and Stock on hand

When you cancel your VAT registration, you usually make what is known as a deemed supply of the goods you have on hand.

This means you may have to account for VAT on some of your business assets and stock on hand, depending on:

  • what they are
  • how you obtained them
  • why you’re cancelling your registration.

You will not have to account for VAT if the total VAT due on the assets would be £1,000 or less.

You must include assets such as:

  • interests in land (but only if they would be taxable if you sold them, for example, where an option to tax has been made)
  • tangible goods (for example, unsold stock, plant, furniture, commercial vehicles, computers) on which you claimed VAT when you bought them

You do not have to include intangible assets such as patents, copyrights and goodwill.

If you obtainedyou must
goods VAT free as assets of a business which was transferred to you as a going concern by a taxable personaccount for VAT on them.
land or buildings as assets of a business transferred to you as a going concern.account for VAT on them if you’ve opted to tax.

You’ll often have to opt to tax in order to receive land and buildings as part of a transfer of a going concern.

You can find more information in Transfer a business as a going concern (VAT Notice 700/9).

Advantages of VAT De-registration

If you deregister your business, there are several possible advantages:

  You may be able to sell more products or services because your prices no longer include VAT.

  • You won’t have to retain VAT receipts covering your own purchases.
  • You won’t have to prepare, and you won’t have to submit regular VAT returns.
  • Accounting will be simpler because you won’t have to keep your accounts up to date by the end of each quarter.

 Disadvantages of VAT De-registration

However, there are also possible disadvantages:

  You will no longer be able to claim back VAT on your own purchases of VAT-rated products or services.

  • You may lose business from companies that will not deal with suppliers perceived to be small.
  • It is still recommended that you accounting records up to date to see if you are trading profitably.

If you need help or want more information on VAT registration, please contact us:

Call 07795 425032

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