How to deregister for VAT

What is VAT?

VAT, or Value Added Tax, is an additional tax on most products and services sold by VAT-registered businesses and is charged at a standard rate of 20% on top of your invoice values.

The easiest way to register for VAT is by creating an online account – you’ll receive a 9-digit VAT number (that you’ll need to include on all your raised invoices), information about when to submit your first VAT return and payment, as well as a confirmation of your registration date (known as your ‘effective date of registration’).

Who has to register for VAT?

You will have to register for VAT if:

• your total VAT taxable turnover for the last 12 months was over £90,000
• you expect your turnover to exceed £90,000 in the next 30 days
• you or your business is based outside of the UK (regardless of your annual turnover)

Some businesses choose to register even if their turnover is less than the threshold, and that’s due to the following benefits:

• Being able to reclaim VAT on goods and services purchased for business reasons, where you have been charged UK VAT.
• It lends credibility to your business – your clients and customers can potentially reclaim the VAT you’ve charged them on invoices.
• It can give you access to a wider range of suppliers and clients since most will only deal with VAT-registered companies.

Take a look at our Sole Traders and VAT page for more information on who needs to register for VAT.

What are my responsibilities as a VAT-registered business?

As a VAT-registered business, you’ll need to:

• Add VAT to the price of all goods and services at the correct rate (currently 20% – 2024)
• Keep records of how much VAT you pay for things you buy for your business
• Send a VAT return to HMRC each quarter – this should include the amount of VAT you charged your customers and the amount of VAT you paid to other businesses
• Pay any VAT you owe to HMRC

How to deregister for VAT

If you stop trading or making VAT-taxable supplies, or you join a VAT group, then you will have to cancel your registration.

You’ll have 30 days to deregister and you may face a penalty if you don’t do it within this time frame of your circumstances changing.

To cancel online you’ll need your Government Gateway user ID and password. It should take around three weeks for HMRC to both confirm your cancellation and give you a cancellation date.

What happens after I’ve deregistered for VAT?

Once you’ve received your cancellation date, you cannot charge VAT from this day.

You will have to submit a final VAT Return to HMRC and this must be completed within one month of your cancellation date (unless you are on a cash accounting scheme, which gives you two months).

You may also need to account for any stock and assets if you reclaimed, or could have reclaimed VAT when you bought the assets and the total VAT dues on these is over £1,000.

You’ll need to keep all your VAT records for the next six years.

An accountant will be able to give you professional help and advice on how to deregister for VAT.

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Our team of experts are available to answer any queries you may have, so drop us a line on 01442 795 100, email jaime.thorpe@dolanaccountancy.com, or contact us via live chat.