When and how to de-register for VAT

Updated on May 24, 2022

If your firm has registered for VAT, but your turnover falls below the de-registration threshold of £83,000, you can de-register from VAT.

Why de-register for VAT?

If your business’ VAT taxable revenue is more than £85,000 (in the 2021/22 tax year), you must register for VAT with HMRC.

If your company’s VAT taxable revenue is less than £83,000, you can ask HMRC to terminate your VAT registration.

If you are no longer qualified for VAT registration, you must terminate your registration.

If your business is no longer in operation, or if you no longer produce VAT taxable sales, or if you join a VAT group, this could result in you being charged VAT. When two or more corporate bodies are involved, “one of the corporate bodies in the group acts as the representative member,” according to HMRC, “a single registration number can be used to account for VAT.”

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When must you de-register for VAT?

Money and forms

How to cancel your VAT registration

Your “Government Gateway account” (aka your VAT online account) allows you to cancel your VAT registration.

Form VAT7 can be filled out and mailed to the address provided if you choose to deregister for VAT via mail.

What happens after I cancel my VAT registration?

For HMRC to confirm your de-registration and the formal de-registration date, it typically takes three weeks (ie when the reason for your cancellation took effect, for example, you stopped trading, or when you asked to de-register if this was voluntary).

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If you didn’t deregister online, HMRC will give you a confirmation via your VAT online account or regular mail.

You must immediately stop charging VAT after your de-registration, but you must keep your VAT records for six years in case HMRC requests them.

If HMRC determines that you should not have cancelled your business, it will automatically re-register it. You’ll also be responsible for any applicable VAT.

A final VAT Return must be submitted for the time period leading up to and including the date of de-registration.

If you were able to claim VAT on these assets when you purchased them, you must account for them on the date of your de-registration.

In the words of HMRC: “Submit your final return as soon as possible after receiving all your invoices. Once you receive the invoices, you will be able to claim VAT back on any purchases you made for your firm while you were still registered.”

What if I want to transfer VAT registration?

An organisation can move its VAT registration to another organisation. If you buy a firm and wish to continue using its VAT number, you might do this.

You can apply for a VAT registration transfer online (via your VAT online account) or by mail, using form VAT68, if you choose.

If you’re buying or selling a business, you and the seller must tell HMRC. Any Direct Debits set up by the seller should be cancelled and fresh ones should be set up by you (the buyer). In most cases, the transfer is confirmed by HMRC within three weeks after the date of the transfer.