If you’re a business owner in the UK, understanding and navigating the intricate world of tax regulations is crucial. One important aspect is deregistering for Value Added Tax (VAT). Where your circumstances have changed and you no longer need to be registered for VAT, knowing when and how to deregister from VAT is essential. This article provides a comprehensive guide on when to deregister, how to deregister for VAT and when to use Form VAT 7. Additionally, it offers important information on what happens after you cancel and how to submit your final VAT Return. So, if you’re ready to dive into the world of VAT deregistration in the UK, let’s get started!
When to register for VAT
You should register for VAT if you meet certain criteria. If your VAT taxable turnover exceeds £85,000 in any period of 12 months, or you expect it to exceed this amount in the next 30 days, you must register for VAT. However, you can choose to register for VAT voluntarily if your turnover is below this threshold. It is important to keep in mind that if you register voluntarily, you will have to comply with all VAT rules and regulations.
Cancel your registration
There may be instances where you need to deregister from VAT. This could be due to various reasons, such as if you stop trading or making VAT taxable supplies, or if you join a VAT group. It is important to cancel your registration within 30 days if you are no longer eligible, as failing to do so may result in penalties. However, there are certain situations where you may not need to cancel your registration.
Reasons to cancel your registration
There are several reasons why you might need to deregister from VAT. This could include situations where you have ceased trading, your business has changed its legal status, or you have sold your business and the new owner does not want to keep the same VAT registration number. It is important to assess your situation and determine whether you need to cancel your registration.
Deadline for cancelling
If you need to deregister from VAT, you must do so within 30 days of becoming ineligible. Failing to cancel within this timeframe may result in penalties. It is important to be aware of the deadline and take the necessary steps to cancel your registration if required.
How to cancel online
If you meet certain criteria, you can cancel your VAT registration online. This includes situations where you have stopped trading, your VAT taxable turnover is below £83,000, or you have stopped making VAT taxable goods or services. To cancel online, you will need your Government Gateway user ID and password. Follow the step-by-step guide provided on the HMRC website to complete the cancellation process.
How to cancel by post
In some cases, you may need to cancel your VAT registration by post. This could be due to changes in your legal status, selling your business with a new owner who does not want to keep the same VAT registration number, or if your VAT group is closing. To cancel by post, you will need to submit form VAT7 to HMRC. Fill in the form completely before printing and sending it to the designated address provided on the form.
Confirmation and next steps
Once you have submitted your cancellation request, it may take up to 3 weeks for HMRC to confirm the cancellation and provide you with an official cancellation date. This date will be either the date when the reason for cancellation took effect or the date you requested the cancellation. HMRC will send confirmation either through your VAT online account or by post if you did not apply online. It is important to stop charging VAT from the cancellation date and keep all VAT records for 6 years.
VAT after you cancel
After cancelling your VAT registration, you will still need to submit a final VAT Return for the period up to and including the cancellation date. If you have reclaimable VAT on assets that you bought and the total VAT due on these assets is over £1,000, you must account for them. Make sure to submit your final return within the specified deadline and account for any VAT owed. It is important to note that HMRC may automatically re-register you if they realize that you should not have cancelled, and you may be required to pay any VAT owed.
Transfer your registration
In certain situations, you may need to transfer your VAT registration to another party. This could be due to changes in your business structure or the sale of your business. To transfer your registration, you will need to complete a VAT50-51 form and submit it to HMRC. Make sure to follow the instructions provided on the form and provide all the necessary information. HMRC will review your application and inform you of the outcome.
Why you might not need to cancel
There are certain situations where you may not need to cancel your VAT registration. These include changes in your legal status or selling a business while retaining the same VAT registration number, closing down a single company within a VAT group, joining a VAT group, or creating a new VAT group. It is important to assess your situation and determine whether you need to cancel your registration or take alternative actions.
Changing legal status or selling a business
If you are changing your business’s legal status or selling your business but want to keep the same VAT registration number, you do not need to cancel your registration. Instead, you will need to transfer your registration by completing a VAT50-51 form and submitting it to HMRC. This will allow you to maintain your existing VAT registration number while updating the necessary information.
Closing down a single company in a VAT group
If you are part of a VAT group and one of the companies within the group is closing down, you do not need to cancel your VAT registration. Instead, you must complete a VAT50-51 form to notify HMRC of the closure. This will allow the remaining companies within the VAT group to continue operating under the same registration.
Joining a VAT group
If you are joining a VAT group, you do not need to cancel your VAT registration. Instead, you must complete a VAT50-51 form to notify HMRC of your intention to join the VAT group. This will allow you to become part of the group and operate under a single VAT registration.
Creating a new VAT group
If you are creating a new VAT group, you must register for VAT and complete a VAT50-51 form to notify HMRC of the new group. This will allow you to establish the VAT group and operate under a single VAT registration.
How to cancel online
If you meet certain eligibility criteria, you can cancel your VAT registration online. This includes situations where you have stopped trading, your VAT taxable turnover is below £83,000, you have stopped making VAT taxable goods or services, or you are applying for an exemption if most or all of what you sell is VAT zero-rated. To cancel online, you will need your Government Gateway user ID and password. Follow the step-by-step guide provided on the HMRC website to complete the cancellation process.
Eligibility for cancelling online
Before attempting to cancel your VAT registration online, it is important to check if you meet the eligibility criteria. Make sure that you have stopped trading, your VAT taxable turnover is below £83,000, you have stopped making VAT taxable goods or services, or you are applying for an exemption.
Government Gateway user ID and password
To deregister from VAT online, you will need to have a Government Gateway user ID and password. If you do not have one, you can create an account on the HMRC website. Make sure to keep your login details secure and only share them with authorized individuals.
Step-by-step guide to cancelling online
To cancel your VAT registration online, follow the step-by-step guide provided on the HMRC website. Make sure to enter all the required information accurately and review your submission before finalizing it. Once you have successfully completed the cancellation process, HMRC will review your request and confirm the cancellation if everything is in order.
How to cancel by post
To cancel by post, you will need to submit form VAT 7 to HMRC. Fill in the form completely before printing and sending it to the designated address provided on the form.
Submitting form VAT 7
To deregister from VAT by post, you will need to fill in VAT 7 Form. Make sure that you provide all the necessary information and complete the form accurately. Verify that all the details entered are correct before printing and submitting the form.
Address to send the form to
Once you have filled in form VAT 7, you will need to send it to the designated address provided on the form. Make sure to include any additional documentation or forms that may be required. It is important to send the form to the correct address to ensure that your cancellation request is processed promptly.
Confirmation and next steps
After submitting form VAT 7 to cancel your VAT registration by post, it may take some time for HMRC to process your request. You will receive confirmation of the cancellation and the official cancellation date from HMRC. It is important to keep this confirmation for your records. Additionally, make sure to stop charging VAT from the cancellation date and maintain accurate VAT records for the required period.
In conclusion, registering for VAT is an important step for businesses that meet the eligibility criteria. However, there may be circumstances where you need to deregister from VAT. It is crucial to be aware of the reasons for cancellation, the deadlines to adhere to, and the available methods for cancellation. Whether you choose to cancel online or by post, follow the guidance provided by HMRC and ensure that you provide accurate and complete information. By understanding the VAT cancellation process, you can effectively manage your VAT obligations and ensure compliance with HMRC regulations.