{"id":9903,"date":"2023-02-18T17:07:30","date_gmt":"2023-02-18T17:07:30","guid":{"rendered":"https:\/\/www.qualitycompanyformations.co.uk\/blog\/?p=9903"},"modified":"2024-04-01T19:53:03","modified_gmt":"2024-04-01T18:53:03","slug":"deregister-for-vat","status":"publish","type":"post","link":"https:\/\/www.qualitycompanyformations.co.uk\/blog\/deregister-for-vat\/","title":{"rendered":"Deregister for VAT – a guide to cancelling your registration"},"content":{"rendered":"
\n Last updated: 1 Apr 2024<\/strong>\n <\/div>\n \n

If your business is no longer eligible for VAT registration, you must apply to HMRC to deregister for VAT, i.e. cancel your registration. You can also choose to deregister voluntarily at any time if your VAT-taxable turnover is below \u00a388,000. This is the deregistration threshold applicable from 1 April 2024.<\/p>\n

In this guide, we explain what VAT deregistration means, the common reasons why a business may need or want to deregister, and the steps you need to take to successfully cancel your VAT registration with HMRC.<\/p>\n

What does it mean to deregister for VAT?<\/h3>\n

From 1 April 2024, businesses must register for VAT with HMRC when their annual VAT-taxable turnover exceeds \u00a390,000, or they expect to exceed this threshold in the next 30 days.<\/p>\n

This rule applies to all types of legal structures, including limited companies, limited liability partnerships (LLPs), general partnerships, and sole traders.<\/p>\n

Voluntary VAT registration is also possible for businesses with an annual turnover below the VAT registration threshold.<\/p>\n

When should I register for VAT?<\/span><\/a>\n How do I get a company VAT number?<\/span><\/a>\n <\/p>\n

However, there are a number of situations where a business may want to cancel its VAT registration, or be legally required to do so. This process of cancelling VAT registration is often referred to as deregistering for VAT.<\/p>\n

If you need or want to deregister for VAT for any reason, you must apply to HMRC online or by post. You will also need to make a number of changes to your business, including no longer charging VAT on the goods or services you provide.<\/p>\n

Why would a business deregister for VAT?<\/h3>\n

There are several reasons why a business would apply to deregister for VAT. Some of these are compulsory, whilst others are voluntary.<\/p>\n

Compulsory VAT deregistration<\/h4>\n

By law, you must cancel your VAT registration within 30 days if your business meets at least one of the following conditions:<\/p>\n

1. No longer offers VAT-taxable goods or services<\/h4>\n

You can only charge VAT if your business trades or makes taxable supplies, i.e. if you sell VAT-taxable goods or services to customers.<\/p>\n

If you stop selling supplies that attract VAT and you have no intention of doing so in the future, you are no longer eligible for VAT registration and cannot charge your customers VAT.<\/p>\n

It may also be the case that you registered for VAT with the intention of selling taxable goods, but the plan never came to fruition. This often happens with startups.<\/p>\n

2. Your business ceases trading<\/h4>\n

If you stop trading through your business, you are legally required to notify HMRC and cancel your VAT registration.<\/p>\n How to close a company online<\/span><\/a>\n \n

This could be as a result of permanently closing your business, having your company struck off the register, or making your company dormant for an indefinite period of time.<\/p>\n

3. You sell your business<\/h4>\n

If you decide to sell your business<\/a>, you will need to cancel your VAT registration. However, if the new owner wishes to continue using the same VAT number, you can stipulate this on the deregistration form. By doing so, the new owner will be able to apply to HMRC for a VAT registration transfer.<\/p>\n

4. Change of legal structure<\/h4>\n

Some existing businesses change their legal structure – for example, from sole trader to limited company. When this happens, you must cancel the VAT registration for your original business structure.<\/p>\n

What is the right company structure for my business?<\/span><\/a>\n Sole trader or limited company \u2013 which is better for me?<\/span><\/a>\n <\/p>\n

However, during the deregistration process, you have the option of transferring your VAT registration to your new business structure. This will allow you to keep your existing VAT number.<\/p>\n

Alternatively, you can apply for a completely new VAT number in the name of the new legal structure.<\/p>\n

5. Your business joins a VAT group registration<\/h4>\n

Your business cannot have more than one active VAT registration. Therefore, if you create or join a VAT group, you will need to cancel your existing VAT registration.<\/p>\n

The group will have its own VAT number, under which one member company will collect, report, and pay all future VAT for all members of the group.<\/p>\n

6. You intend to join the Agricultural Flat Rate Scheme<\/h4>\n

The Agricultural Flat Rate Scheme<\/a> is an alternative to VAT registration for farmers.<\/p>\n

If you choose to join the scheme and your business is registered for VAT, you will need to cancel your VAT registration.<\/p>\n

Voluntary VAT deregistration<\/h4>\n

You can apply to voluntarily deregister for VAT at any time, provided that your annual VAT-taxable turnover is below \u00a388,000. This is the deregistration threshold from 1 April 2024.<\/p>\n

It is set at \u00a32,000 below the VAT registration threshold to prevent businesses from opting in and out of registration when their taxable turnover fluctuates by only minimal amounts.<\/p>\n

The most common reason why a business may choose to cancel its VAT registration is that its taxable turnover<\/a> has fallen below the threshold and VAT registration is no longer beneficial. This could be as a result of:<\/p>\n