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Once you have cancelled your Value Added Tax (VAT) registration, there are some limited circumstances in which you can reclaim input VAT. This guide explains those circumstances and tells you how you can reclaim any VAT you are owed.
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After deregistering for VAT, there are some limited situations in which you can reclaim input VAT.
You can claim any unclaimed VAT on goods and services that were supplied to you while you were registered for VAT as long as the goods and services were purchased in order for you to make intended or actual supplies. Where you know you are going to deregister e.g. because your turnover has fallen below the registration threshold you should not recover VAT on any goods or services that are going to be used to make supplies after deregistration. As with any recovery of VAT you must keep the correct evidence, ie a full tax invoice.
Where you have reclaimed VAT on goods which are on hand at deregistration you will have to pay back the VAT you have reclaimed on your final return.
You cannot claim for VAT on any goods you buy after your registration was cancelled.
You can claim relief for VAT on services supplied to you after your registration was cancelled, as long as these services relate solely to your taxable business activities, ie those made when you were VAT registered. Examples could include services provided by a solicitor or an accountant. However, if you were restricted in some way in recovering input tax - perhaps because you made supplies that were exempt from VAT, or had activities that were not related to your business - then you must apply the same restriction to your claim.
You cannot recover VAT incurred on purchases related to exempt supplies at all, after de-registration - the partial exemption de minimis limits do not apply to tax incurred after de-registration. So, if you think you might incur VAT on services related to the disposal of exempt business assets, you can ask the HM Revenue & Customs (HMRC) VAT Registration Service to delay cancelling your registration for up to six months.
If you have bad debts after cancelling your registration, you can claim relief from VAT on them. This is as long as you have accounted for VAT on the supplies and meet the usual conditions for reclaiming on bad debts. You can only claim within three years of the date the relief became claimable.
You cannot claim for VAT more than four years after the date it was incurred - the tax point of your supplier's invoice.
You can claim for VAT after de-registration by completing form VAT 427 and sending it to HMRC. You should make your claim as soon as possible after de-registration. If your business bank account has been closed, then there could be a delay in any payments you are owed.
Send your completed form VAT 427 to the address on the form.