Guide to VAT Deregistration

Updated on May 14, 2022

The process of removing one’s VAT registration is usually quite simple. However, there are several critical considerations to make that, if overlooked, could have an adverse effect on your bottom line.

When can I deregister for VAT?

If any of the following situations apply to your firm, you must cancel your VAT registration:

There will be no further taxable supplies made by this company.
For example, if you go from a sole proprietor to a corporation. The new company, on the other hand, might continue to use the old VAT number.
Yes, if the firm is sold The VAT number, on the other hand, might be retained by the owner.
Originally, it might have registered with the goal of making taxable supplies, but that’s no longer the case.
To become a member of a group registration, a corporation must be registered as a corporate body.
Group registration has been terminated, and this is the representative member.
Taxable turnover must not surpass the threshold (currently £83,000) in the next 12 months for a business to be able to deregister from VAT.

Even though capital assets might be ignored, positive-rated supplies of land and buildings must be taken into consideration. HMRC can be difficult to persuade when it comes to claiming lower turnover levels.

What happens to my company’s assets when I deregister from VAT?

Deregistration requires you to account for VAT on any remaining tangible assets. And in the case of a deregistration, when the VAT payable exceeds a thousand pounds.

As a result, if all of the assets were standardly VAT-rated at 20%, the total value would need to be at least £6,000 to include VAT. Any relevant assets that were previously purchased should be included in a transfer of a going business, even if they were not subject to VAT at the time of the acquisition.

Assets, on the other hand, may be exempt if VAT was not deducted at the time of acquisition. For instance, any commodities utilised solely for exempt activities are exempt from this rule (although if the input tax was partially recoverable, such assets must be included).

Deregistration cannot be retroactively applied. HMRC generally allows the registration to remain active for six months if forced deregistration is in effect.

Do you have a question about VAT?

If you have any questions about your responsibilities on VAT, simply  with us. Additionally, consider reading our guide to VAT.

How can SJD Accountancy help?

When beginning a business, hiring an accountant can save you both time and stress. Please contact us if you have any questions or concerns regarding any of the above information or any other questions you may have.