Closing or selling your business and VAT registration

If you close or sell your business, you need to tell HM Revenue & Customs (HMRC) within 30 days.

If you close or sell your business you may need to cancel your VAT registration. However, if you sell your business as a going concern or transfer it to another legal entity, then in some circumstances the new owner can apply for your registration number to be reallocated to them.

This guide outlines the steps you need to take.

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Closing your business

If you close your business because you cease trading, you should tell HMRC and cancel your VAT registration. You need to do this within 30 calendar days of closing your business if you want to avoid becoming 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.

Cancel your VAT registration online

You can also use form VAT 7 - Application to cancel your VAT registration - and send it to HMRC. If you send your request to HMRC by post you will receive a response within three weeks.

Get form VAT 7

Get information about how to cancel your VAT registration

Find out how and when to tell HMRC about changes in your business circumstances

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Selling your business

For VAT purposes, HMRC considers that you have transferred your business as a going concern if:

  • you retire and another person takes over the assets of your business
  • you sell your business and its assets to someone else
  • you sell part of your business that is capable of being operated separately to somebody else

When you transfer your business as a going concern, you normally have to cancel your VAT registration.

If you need to cancel your VAT registration see the section on 'Closing your business' above.

However in some situations, the new owner of the business can apply to keep your VAT registration number. If you agree and allow the new owner to keep the VAT registration number, you will both need to tell HMRC. You can do this using HMRC's online services.

Request for transfer of a registration number online

Alternatively, you can use form VAT 68 and send it to HMRC by post.

Get form VAT 68 - Request for transfer of a registration number

You need to tell HMRC within 30 calendar days of selling your business to avoid becoming liable for a financial penalty.

If you decide to allow the transfer of your VAT registration number to the new owner of the business you should cancel any Direct Debit that you have set up to pay your online VAT Returns. The new owner of the business can set up a new Direct Debit through the VAT online service.

Treatment of the sale for VAT purposes

Normally when you sell something, the sale is treated as a supply for VAT purposes. However when you sell your business, in certain circumstances special rules apply and the sale will not be treated as a supply, for VAT purposes, so no VAT should be charged. In other circumstances, you'll have to charge VAT in the normal way.

These special rules help businesses by improving their cash flow. They also avoid the need to separately value assets that may be liable at different rates or are exempt but have been sold as a whole package.

Read about taking over a business and VAT registration

More about the special rules when selling a business in VAT Notice 700/9

More about how land and property are treated in VAT Notice 742

More about opting to tax land and buildings in VAT Notice 742A

Keeping records

After you sell your business, you must retain your VAT records.

If the buyer keeps your VAT number, you must pass your records to them. Permission can be sought from HMRC for you to keep your records, but you will still have to make the information available to the buyer so that they can comply with their own VAT responsibilities.

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