Business may have recently taken a downturn or you are in the process of closing it down. If you are wondering about how and when to re-register from VAT then read on…
When to deregister for VAT
You can de register from VAT if you have stopped trading or making taxable supplies or your taxable turnover is below the de-registration threshold which is currently £83,000 (current limits).
Assets and Stock
If you met the criteria in the points above, you must then consider when the best time to deregister is for you. If you have recently brought assets and reclaimed the VAT back it probably isn’t the best option to deregister straight away. This is because HMRC are entitled to collect the VAT back on the value of the assets at the point of de-registration providing that the total VAT due of all your assets and stock is over £1,000.
How to deregister
You can deregister from VAT online through your online HMRC account or you could also download form VAT7 online from the HMRC website.
What happens Next
Within 3 weeks you should receive confirmation from HMRC that you are to be deregistered from VAT (usually quicker if you apply online). They will also issue you with an official de-registration date. This is the date you can stop charging VAT on your sales however, you will also have to stop claiming VAT back on any expenses after this date. You will be issued with a final VAT return. This will account for any VAT on sales and purchases between the last return that was filed and the date of de-registration. Included within this return will also be any VAT to be collected by HMRC for the current value of any assets or stock you may have.
Although the process of deregistering for VAT is fairly straightforward the timing is key. Get this wrong and you could end up costing yourself. Always speak to your accountant prior to taking action.