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There are a number of situations in which you must cancel your VAT registration, for example if you stop making VAT taxable supplies. In some circumstances you can voluntarily cancel your registration, for example if you expect the value of your taxable supplies to reduce or if your taxable supplies are mainly zero-rated.
This guide explains how you should go about cancelling your VAT registration, and how you should account for VAT after your registration is cancelled.
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You must tell HM Revenue & Customs (HMRC) that you need or want to cancel your VAT registration within 30 calendar days of the reason for cancellation arising, to avoid being liable for a financial penalty.
You can cancel your VAT registration online. HMRC will tell you when your VAT registration has been cancelled using the customer communications service. Once you have logged in to HMRC Online Services you can access customer communications from the 'Your HMRC services' page.
You can also complete form VAT 7 Application to cancel your VAT registration and send it to HMRC by post. If you don't you receive a response within three weeks you should contact HMRC.
Your registration will be cancelled from the date corresponding to whichever of the following applies to the circumstances of your cancellation:
If you want to de-register voluntarily, then you need to tell HM Revenue & Customs (HMRC) the date when you want your VAT registration to stop. This will be either the date when they receive your request or an agreed later date. You should continue to charge and account for VAT until HMRC confirms that they have cancelled your registration.
If HMRC doesn't accept your request to cancel your VAT registration, you'll have to continue charging and accounting for VAT.
You must notify HMRC promptly if you become liable to be registered at any time in the future. There are penalties for failing to register at the proper time.
If you cancel your registration in error, let HMRC know. What action they take depends on the exact circumstances in which your registration was cancelled. If HMRC discovers that you supplied false or misleading information in order to cancel your registration, they will take action to re-register you, and you will be responsible for accounting for any VAT due from the date of re-registration.
If HMRC is satisfied that your VAT registration should be cancelled, then you will be sent one of the following:
These forms confirm the date your registration is cancelled. They become part of your VAT records and must be kept for six years, along with your other VAT records.
You must also complete a final VAT Return including VAT due on stocks and assets, and return it by the due date. Don't wait until you have received all your invoices before submitting your final return. If you receive more after you send it, you can claim for input tax. If you submit your VAT Returns online you will complete your final VAT Return online.
If you complete paper VAT Returns, you will be sent a paper final VAT Return - form VAT 193, or its Welsh equivalent - form VAT 197.
If you have already accounted for all or part of the VAT due for the final period on your normal VAT Return, you must consult HMRC before completing your final return.
When you cancel your registration, you must also account for VAT on stock and certain assets you have at the close of business on the day your VAT registration is cancelled.
Once you have cancelled your VAT registration, you must no longer charge VAT on goods or services you sell, or use VAT invoices.
You may be able to reclaim VAT on some invoices that you receive after your registration ends.
When you cancel your registration, you must account for VAT on stock and certain assets you have at the close of business on the day your VAT registration is cancelled. You'll need to include assets like interest in land - but only where supplies, if made, were taxable - and tangible goods on which you could reclaim VAT when you bought them. Tangible assets include items like unsold stock, plant, furniture, commercial vehicles and computers. You don't need to worry about intangible assets like patents, copyright and goodwill.
If you obtained goods free of VAT as assets of a business transferred to you as a going concern from a taxable person, then you must include them in your VAT calculations.
If you obtained land or buildings as assets of a business transferred to you as a going concern, then you must account for VAT on them if you have 'opted to tax'.
You should exclude items on which you couldn't reclaim VAT when you bought them. These may be:
If you have goods on hand when a registration is cancelled, HMRC usually considers this to count as a supply. So if you own any capital items when you cancel your registration you may be required to make a final adjustment in respect of any items still within the adjustment period. This adjustment should be made on your final return. If you are in any doubt about whether or not you have to make an adjustment, you should contact HMRC.
You can work out the VAT you owe by valuing the relevant land or goods at the price you would expect to pay for them in their present condition. If you cannot work this out, then you should use the price you would expect to pay for identical or similar land or goods. If you can't work this out, then you should use the price the goods would cost to produce at the time you cancelled your registration.
If the total VAT on the relevant assets is £1,000 or less, you don't need to pay any VAT. So if the relevant assets are all standard-rated, you don't have to account for VAT if their total value, including VAT, is £6,000 or less. If they're worth more than this, then you must account for VAT on all the goods you have on-hand on your final VAT Return.
Make sure that you don't under declare the VAT due on your final VAT Return, as this could lead to a fine.
If you are partly exempt, the final adjustment period - your deregistration period - will run from the day following your last full tax year to the date of deregistration. However, if you haven't incurred any exempt input tax in your previous tax year - or where applicable, the registration period immediately preceding your deregistration period - the final adjustment period will run from the first day of the accounting period in your final tax year in which you first incur exempt input tax to the date of deregistration.
Special rules apply if you use the Cash Accounting or Annual Accounting Schemes.
If you haven't found what you're looking for here, there's more information in VAT Notice 700/11.