Cancelling your registration

Foreword

This notice cancels and replaces Notice 700/11 (April 2010). Details of any changes to the previous version can be found in paragraph 1.2 of this notice.

1.Introduction

1.1 What is this notice about?

This notice tells you when and how to cancel your VAT registration. It explains the procedures to follow if you are currently registered for making

• taxable supplies in the UK
• distance sales
• relevant acquisitions
• relevant supplies.

It explains the differences between compulsory and voluntary deregistration.

The supplement to this notice gives details of the previous and current registration and deregistration thresholds.

1.2 What's changed?

We have made changes to the April 2010 edition to reflect

• the introduction of a new online system for deregistering from VAT
• the removal of the VAT registration threshold for non-established taxable persons.

1.3 Who should read this notice?

You should read this notice if you

• want to understand under what circumstances you must, or can ask to, cancel your VAT registration
• are looking for information about what you need to do in order to cancel your registration.

1.4 What areas of law does this notice cover?

Schedules 1, 2, 3 and 3A of the VAT Act 1994 contain the provisions for cancellation of registrations.

Regulations 5(3) and 25(4) of the VAT Regulations 1995 provide the rules about notifying deregistration and the final VAT return.

2. Basic information

2.1 What if I make more than one type of supply?

2.3 What if I am no longer liable to be registered?

Whether you can remain registered depends on your circumstances.

2.4 What if someone takes over my business?

2.5 What if I change legal entity?

2.6 What if I am registered as a VAT group?

2.7 What if I am already VAT registered and intend to create or join a VAT group?

A taxable person can not have more than one active registration. So, when a group is created, its founder members will need to cancel their existing VAT registrations.

The group will be issued with its own registration number.

Any new member joining the group at a later date will also have to cancel its original registration.

If you are a non-established taxable person (NETP), you can not join a VAT Group. For more information, see notice 700/2 Group and divisional registration. If you are not sure whether you are an NETP, please see Notice 700/1 Should I be registered for VAT?

2.8 What if I am already VAT registered and intend to join the agricultural flat rate scheme?

You can not usually be registered for VAT and as a flat rate farmer at the same time, so you will have to cancel your VAT registration.

For more information about

• registering as a flat rate farmer
• the limited circumstances in which you might still be able to be VAT-registered for other supplies

please see Notice 700/46 Agricultural flat rate scheme.

2.9 What if my business activity involves supplies of land and buildings?

An option to tax remains valid after your registration has been cancelled. You must monitor this income to see whether you exceed the registration threshold and need to register again.

You can find more information in Notice 742A Opting to tax land and buildings.

2.10 What if I use the Tour Operators Margin Scheme?

There are special rules for determining your taxable turnover if you use the Tour Operators Margin Scheme. You can find more information in Notice 709/5 Tour Operators Margin Scheme.

2.11 What if I am a barrister?

There are special rules about accounting for your outstanding fees. You can find more information in Notice 700/44 Barristers and Advocates.

2.12 What if I am an agent for other VAT-registered businesses?

2.13 What if I should not have cancelled my registration?

The action we take in re-registering you for VAT will depend on the exact circumstances in which your registration was cancelled. If we discover that you supplied false or misleading information in order to cancel your registration, we will take action to re-register you. You will be responsible for accounting for any VAT due from the date of re-registration.

2.14 What if I need to register again?

You must let us know promptly if you become liable to be registered again at any time in the future. There are penalties for failing to register at the proper time. Notice 700/1 Should I be registered for VAT? will help you to decide whether you need to register.

3. I am registered because I make taxable supplies in the UK

3.1 Compulsory deregistration

If you are registered because you make taxable supplies in the UK, you must cancel your registration if any of the following occur:

• you stop making taxable supplies
• you sell your business (but see paragraph 2.4)
• your legal status changes (but see paragraph 2.5)
• you disband your VAT group (but see paragraph 2.6)
• you join a VAT group (but see paragraph 2.7)
• you join the agricultural flat rate scheme (but see paragraph 2.8).

3.2 Voluntary deregistration

You can ask for voluntary deregistration if any of the following occur:

• you can satisfy us that your taxable turnover in the next 12 months will not exceed the deregistration limit
• you close down part of your business and you satisfy us that your taxable turnover for the remainder will not exceed the deregistration threshold
• your turnover exceeds the registration limit but your taxable supplies are wholly or mainly zero rated. If you make any standard rated supplies, you can only deregister voluntarily if your input tax normally exceeds your output tax. If these circumstances apply to you, you should write to the VAT Registration Service explaining why you think you should be exempt from registration.

If you are requesting voluntary deregistration on turnover grounds, you will need to tell us why you think your turnover is going to fall below the deregistration limit. You may, for example, have reduced your opening times, lost contracts, or changed your business practices. You should also tell us what you expect your turnover will be in the following twelve months.

When you are calculating your turnover, you should do it on a VAT-exclusive basis.

We will not allow you to cancel your registration if the reduction in your turnover is the result of your intention to stop trading or suspend making taxable supplies for 30 days or more in the next 12 months.

3.3 What if I am a non-established taxable person (NETP)?

If you are an NETP, the UK VAT registration threshold is not available to you.

This means you must register for VAT if you make any taxable supplies in the UK.

You can not apply for voluntary deregistration on the grounds of reduced turnover.

If you are not sure whether you are an NETP, please see Notice 700/1 Should I be registered for VAT? for more information.

3.4 How do I cancel my registration?

You can do this online or you can fill in a form VAT7 and send it to us through the post. When you cancel your registration, you may have to account for VAT on any stocks and assets you have on hand. Please see section 7 for more information.

If you do not let us know about any changes affecting your registration details within 30 days of them happening, you may become liable to a financial penalty.

3.5 When will I be deregistered from?

If your deregistration is compulsory, your registration will be cancelled from the date

• you cease making taxable supplies
• your intention to make taxable supplies ceased
• you sell your business (but see paragraph 2.4)
• your legal status changes (but see paragraph 2.5)
• you disband your VAT group (but see paragraph 2.6)
• you join a VAT group (but see paragraph 2.7), or
• you join the agricultural flat rate scheme (but see paragraph 2.8).

If you are applying for voluntary deregistration, you need to tell us the date you want your registration to end. This can be

• the date we receive your application
• a later date we agree with you.

You can not cancel your registration from a retrospective date.

You should carry on charging and accounting for VAT until we confirm that your registration has been cancelled.

If we decide that you should stay registered, we will tell you. If you disagree with our decision, you have the right to appeal to an independent tribunal.

4. I am registered because I make distance sales

For more information about distance selling, see Notice 700/1 Should I be registered for VAT?

4.1 Compulsory deregistration

4.2 Voluntary deregistration

4.3 What if the goods I sell are subject to excise duty?

You can not cancel your registration, even if the value of your supplies of these goods is below the distance selling registration threshold. You can find more information in Notice 700/1 Should I be registered for VAT?

4.4 How do I cancel my registration?

You can do this online or you can fill in a form VAT7 and send it to us through the post. When you cancel your registration, you may have to account for VAT on any stocks and assets you have on hand. See section 7 for further information.

If you don't let us know about any changes affecting your registration details within 30 days of them happening, you may become liable to a financial penalty.

4.5 When will I be deregistered from?

When you apply for voluntary deregistration, you need to tell us what date you want your registration to end. This can be

• the date we receive your application
• a later date we agree with you.

You can not cancel your registration from a retrospective date.

You should carry on charging and accounting for VAT until we confirm that your registration has been cancelled.

Where you were registered because you had opted to make the UK the place of supply for your distance sales and you have made sales, your registration will normally be cancelled with effect from 1 January, two clear calendar years after your registration date.

5. I am registered because I make relevant acquisitions

For more information about relevant acquisitions, see Notice 700/1 Should I be registered for VAT?

5.1 Compulsory deregistration

5.2 Voluntary deregistration

5.3 How do I cancel my registration?

You can do this online or you can fill in a form VAT7 and send it to us through the post. When you cancel your registration, you may have to account for VAT on any stocks and assets, see section 7 for further information.

If you don't let us know about any changes affecting your registration details within 30 days of them happening, you may become liable to a financial penalty.

5.4 When will I be deregistered from?

If you registered because you had exceeded the threshold, your registration will be cancelled from the date of application or an agreed later date.

If you registered on a voluntary basis, your registration will normally be cancelled with effect from 1 January, two clear calendar years after your registration date.

6. I am registered because I make relevant supplies

For more information about relevant supplies, see Notice 700/1 Should I be registered for VAT?

6.1 Compulsory deregistration

6.2 Voluntary deregistration

You can apply to cancel your registration if all the relevant supplies you intend to make in the future will be zero-rated.

6.3 How do I cancel my registration?

If you are a Non Established Taxable Person (NETP), you can cancel your registration online or send a completed form VAT7 to:

HMRC Non Established Taxable Persons Unit
Ruby House
8 Ruby Place
Aberdeen
AB10 1ZP

You should be aware that, if you fail to notify us of any changes affecting your registration details within 30 days of them occurring, you may become liable to a financial penalty.

When you cancel your registration, you may have to account for VAT on any stocks and assets, see section 7 for further information.

6.4 When will I be deregistered from?

7. Business assets and stock on hand

7.1 What do I have to do about my stocks and assets?

When you deregister, you usually make what we call a deemed supply of the goods you have on hand.

This means you may have to account for VAT on some of your business assets and stock on hand, depending on

• what they are
• how you obtained them
• why you are cancelling your registration.

You will not have to account for VAT if the total VAT due on the assets would be £1,000 or less.

7.2 What must I include?

You must include assets such as

• interests in land (but only if they would be taxable if you sold them, for example, where an option to tax has been made)
• tangible goods (for example, unsold stock, plant, furniture, commercial vehicles, computers) on which you claimed VAT when you bought them.

You do not have to include intangible assets such as patents, copyrights and goodwill.

7.3 Can I exclude anything?

Yes. You do not have to account for VAT on any items on which you did not claim VAT when you bought them. Examples include

• goods you bought from unregistered businesses or private individuals
• cars (except private taxis, self-drive hire cars and driving school cars on which input tax has been claimed)
• goods you bought under a VAT margin scheme
• goods you have used wholly for business entertainment
• goods which you have directly attributed to an exempt business activity (unless some input tax relating to these goods was reclaimable through the partial exemption rules)
• land or buildings which you obtained free of VAT, even if you are using them to make standard-rated supplies (such as holiday accommodation or because you have opted to tax the property)
• goods you didn't buy for business purposes.

7.4 What if I have made an option to tax?

If you have opted to tax any land or buildings, you may have to account for VAT at the time of deregistration. For more information about options to tax, including

• how to revoke an option to tax
• anti-avoidance rules
• exclusions from the effect of an option to tax,

please see Notice 742A Opting to tax land and buildings.

If you sell the opted land or property, VAT may be due on the sale price, subject to transfer of a going concern criteria, as set out in Notice 700/9 Transfer of a business as a going concern.

7.5 What if I am transferring my business as a going concern or changing my legal status?

You can find more information in Notice 700/9 Transfer of a business as a going concern.

7.6 What if I am joining the Agricultural Flat Rate Scheme?

If you are cancelling your VAT registration so that you can join the Agricultural Flat Rate Scheme, you do not need to account for VAT on any of your business assets.

7.7 What if I have items under the Capital Goods Scheme?

If you own any capital items when you cancel your registration, you may, because of the rules about deemed supplies (see 7.1), have to make a final adjustment in respect of any items which are still within the adjustment period. You should make this adjustment on your final return. If you are in any doubt about whether or not you have to make an adjustment, you should contact the VAT Helpline.

You can find detailed information about the Capital Goods Scheme in Notice 706/2 Capital goods scheme.

7.8 How do I work out how much VAT is due?

You should normally value your land or goods at the price you would expect to pay for them, or for similar land or goods, in their present condition.

If you can not work this value out, you should value the goods at the price it would cost to produce them at the time your registration is cancelled.

Remember:

• if the total VAT on the assets to be included is £1,000 or less, no VAT is due
• this means that, if the assets you have to include are all standard rated (20 per cent), you do not have to account for VAT if their total gross (VAT-inclusive) value is £6,000 or less
• if the total gross value is more than £6,000, you must account for VAT on all the goods you have on hand on your final VAT return
• you may incur a financial penalty if you under-declare the VAT due on your final VAT return.

7.9 What if I am partly exempt?

For more information, see Notice 706 Partial exemption.

7.10 What if I use a retail scheme?

If you use any of our retail schemes, you must follow the rules for stocks and assets explained in the particular notice for your scheme or in Notice 727 Retail schemes about ceasing to use a retail scheme.

You must always tell us in advance if you intend to

• change the legal entity of your business (for example, if you are a sole proprietor and you take on a partner)
• sell all or part of your business to a new owner.

7.11 What if I use the Cash Accounting or Annual Accounting schemes?

There are special rules if you use either of these schemes. You will find further information in Notice 731 Cash accounting and Notice 732 Annual accounting.

7.12 What if I pay on account?

If you are included in the Payments on Account (POA) scheme you must continue to make POA instalments until we have confirmed your deregistration, so that you avoid the risk of incurring default surcharge. As an alternative to POA, you may opt to pay the actual monthly amount due. For further information you should refer to Notice 700/60 Payments on Account and contact:

HM Revenue & Customs
Payment on Account
4th floor
Regian House
James Street
Liverpool
L75 1AD

Phone: 03000 540109

8. What will happen when I apply to cancel my registration?

8.1 What will you do when you get my application?

We will send you a reply within three weeks. If you have not heard from us by then, you should contact the VAT Registration Service.

If we are satisfied that your registration should be cancelled, we will send you a formal notice confirming the date on which your VAT registration was cancelled.

This will become part of your VAT records and you must keep it, along with all your other VAT records, for six years. (You can find more information about your obligation to keep records in Notice 700 The VAT Guide.)

You must also keep a list of all the business assets you have on hand on the date you deregister and the value of each, even if they are not liable for VAT.

You must stop charging VAT on your taxable supplies from the date of deregistration.

8.2 Completing your final VAT return.

Unless your VAT number is being transferred to someone who is taking over your business as a going concern, you will need to submit a final VAT return.

Do submit your final return by the due date. Make sure you include any VAT due on stocks and assets. If there is no VAT due, complete the form as nil.

Do talk to our VAT Registration Service before filling in your final return if you have already accounted for all or part of the VAT due on your normal return form.

Don't delay submitting your final return until you have received all your purchase invoices. You will be able to make a claim for input tax on form VAT427 later if you receive invoices after you have submitted the return. (See section 9.)

We may want to visit you to ensure that you have accounted for the full amount of tax. You can find out more about our visits in the Notice 989 Visits by Customs and Excise officers.

8.3 Can I carry on issuing VAT invoices after I deregister?

No. You must not

• charge VAT or issue VAT invoices for any supplies you make after the date of deregistration
• issue any invoices which show your VAT registration number. If you want to use up your stock of invoices and cross out your registration number, please contact the VAT Helpline.

If your customers

• issue VAT invoices on your behalf under self-billing arrangements
• prepare authenticated receipts for you to issue,

you must tell them immediately that

• you are no longer registered
• they must not charge VAT on any further supplies you make.

You may be liable to a financial penalty if you issue a VAT invoice or a VAT-inclusive authenticated receipt for supplies you make after your registration has been cancelled.

9. Reclaiming VAT after deregistration

9.1 Can I claim the VAT back on supplies I received while I was registered?

Yes. You can claim the VAT back as long as

• you haven't already claimed it on a VAT return
• you hold the proper evidence.

If you were subject to some restriction in recovery of input tax (for example, because you made exempt supplies or had non-business activities), you must apply the same restriction to your claim.

You can not claim for

• VAT on goods you buy after your registration is cancelled
• VAT you were charged more than four years ago.

9.2 Can I claim the VAT back on services I received after deregistration?

In some circumstances, yes.

You can claim the VAT back if the services were connected with your taxable business activities. For example, you may have been charged VAT on the services of a solicitor or an accountant.

If you were subject to some restriction in recovery of input tax (for example, because you made exempt supplies or had non-business activities), you must apply the same restriction to your claim.

You can not claim input tax you were charged more than four years ago.

9.3 What about services connected with exempt supplies?

You can not claim back VAT on services which were supplied to you after your deregistration in connection with exempt supplies. This is because the partial exemption de minimis limits do not apply to tax incurred after deregistration.

If you think you may incur VAT on the disposal of exempt business assets, you can ask the VAT Registration Service to delay cancelling your registration for up to six months.

9.4 What about bad debt relief?

You can claim relief on bad debts you identify after you have deregistered, provided you

• have accounted for VAT on the supplies
• can meet the conditions set out in Notice 700/18 Relief from VAT on bad debts.

No claim can be made more than four years from the date when the relief became claimable. There is no entitlement to a refund where the date of the supply fell on or before 30 September 2005.

9.5 How do I claim?

You need to fill in a form VAT427. You can download a copy of the form from our website or you can get one by calling the VAT Helpline. Send us the completed form and the original invoices: you will find the address on page 3 of the form.

You should submit the claim as soon as possible after you deregister. If your business bank account has been closed, any payment due to you could be delayed.

9.6 Dissolved and struck-off companies

Once a company has been dissolved or struck off the register at Companies House, it ceases to exist. It is very important that you make sure the company's affairs are settled before it is dissolved so that we can repay any VAT to you.

Your rights and obligations

Your Charter explains what you can expect from us and what we expect from you. For more information go to Your Charter.

Do you have any comments or suggestions?

If you have any comments or suggestions to make about this notice, please write to:

HM Revenue & Customs
VAT Process Owner Team
1st Floor, Regian House
James Street
Liverpool
L75 1AD

Please note this address is not for general enquiries.

For your general enquiries please phone our Helpline 0845 010 9000.

Putting things right

If you are unhappy with our service, please contact the person or office you have been dealing with. They will try to put things right. If you are still unhappy, they will tell you how to complain.

If you want to know more about making a complaint go to hmrc.gov.uk and under quick links, select Complaints and appeals.

How we use your information

HM Revenue & Customs is a Data Controller under the Data Protection Act 1998. We hold information for the purposes specified in our notification to the Information Commissioner, including the assessment and collection of tax and duties, the payment of benefits and the prevention and detection of crime, and may use this information for any of them.

We may get information about you from others, or we may give information to them. If we do, it will only be as the law permits to:

• check the accuracy of information
• prevent or detect crime
• protect public funds.

We may check information we receive about you with what is already in our records. This can include information provided by you, as well as by others, such as other government departments or agencies and overseas tax and customs authorities. We will not give information to anyone outside HM Revenue & Customs unless the law permits us to do so. For more information go to hmrc.gov.uk and look for Data Protection Act within the Search facility.

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