Deregistering for VAT
At The VAT People, our specialist consultants will help you to deregister for VAT with the minimum of fuss and complication.
If you are no longer eligible to be VAT registered, you must cancel your registration. This is usually a fairly straightforward process, but there are a number of key considerations to keep in mind, as ignoring important rules in this area could prove expensive.
We have decades of experience helping businesses and organisations to overcome challenges relating to all aspects of VAT and ensuring that complicated tax regulations are one less thing for your company to worry about.
Contact us to discuss your circumstances by calling 0333 3635 897, or fill out an online enquiry form and we will be in touch.
How we can help
We are here to help you understand each and every aspect of VAT deregistration, including:
- When to deregister
- The difference between voluntary and compulsory deregistration
- How to deregister
- The potential VAT due on assets “on hand”
- What to expect after deregistration
- In what circumstances you may be eligible for VAT registration transfer
Why must a business deregister for VAT?
A business must deregister for VAT in the following cases:
- If it stops making taxable supplies and has no intention of producing them in the future
- If the legal entity changes, for instance, from a sole trader to a company
- If it is registered because it intended to make taxable supplies, but the intention no longer exists
- If the business is sold (although the new owner could retain the VAT number)
- It is the representative member of a group registration and the group is to be disbanded
- It is a corporate body and is looking to join a group registration
A business is also permitted to deregister from VAT if it can prove to HMRC that taxable turnover in the next 12 months will not exceed the deregistration threshold, which currently stands at £83,000. While supplies of capital assets can be emitted from this threshold, positive-rated supplies of land and buildings must be included.
Often, satisfying HMRC of reduced turnover levels can be difficult.
How are assets in hand treated?
The treatment of assets in hand is one of the most commonly misunderstood areas of deregistration. During this process, VAT must be accounted for on tangible assets in hand, whereas intangible assets, such as goodwill, are excluded, where the VAT due would exceed £1,000.
Therefore, the VAT-inclusive value would need to be £6,000 or more if all the assets were standard-rated with VAT at 20%. It is important to include any relevant assets previously acquired in a transfer of a going concern, even though no VAT would have been charged at the time.
The assets may be excluded if VAT was not deductible on their original purchase, for instance, cars, goods for business entertainment, land/property that had not been opted to tax and any goods wholly used for exempt activities.
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