When and how to de-register for VAT

Updated on July 20, 2022

If your firm has registered for VAT, but your turnover falls below the de-registration level of £83,000, you may be able to de-register.

Why de-register for VAT?

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

Taxpayers can request that HMRC remove their business from VAT registration if their taxable revenue falls below the £83,000 level.

If you are no longer qualified to be VAT registered, you must cancel your registration.

A business ceasing operations, ceasing to make VAT-taxable sales, or joining a VAT group are all possible causes.

When two or more corporate entities are involved, “one of the corporate bodies in the group acts as the representative member,” according to HMRC.

Tax doesn’t need to be taxing

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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.

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Alternatively, you can fill out and mail form VAT7 to the address provided to deregister for VAT.

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 haven’t deregistered online, HMRC will send you a confirmation email or letter.

Keep your VAT records for a period of six years after de-registration, in case HMRC requests them.

It’s possible for HMRC to automatically re-register your firm if it thinks you should not have canceled. Also, you’ll be responsible for any VAT that wasn’t paid by you.

Final VAT returns must be submitted for the period up to and including the date of de-registration.

If you could recover VAT on the assets you purchased and the total VAT owed on these assets exceeds £1000 on the de-registration date, you must account for any stock and other assets you own.

According to the HM Revenue and Customs: “Submit your final return as soon as possible after receiving all your invoices.

Once you receive the invoices for the purchases you made for your firm while you were still registered, you will be able to claim the VAT.”

What if I want to transfer VAT registration?

If you’d like to move your VAT registration from one company to another, that’s possible too.

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Consider doing this after purchasing a business and retaining use of its VAT number.

If you wish, you can use form VAT68 to submit an application for the transfer of a VAT registration either online (via your VAT online account) or by post.

HMRC must be notified by both the business seller and the business buyer. Any Direct Debits set up by the seller should be cancelled and fresh ones should be set up by you (the buyer). HMRC typically confirms the transfer within three weeks.