How Do You Cancel VAT Registration?

A business operating in the UK needs Value Added Tax (VAT) for essential operations until such time that VAT registration needs to be cancelled. Knowing and understanding the proper procedures to cancel VAT registration is important to grasp thoroughly because failing to do so may lead to penalties. This article explains the process to cancel VAT registration through both digital channels and postal delivery and the necessary post-registration actions.

 

When and How to Cancel Your VAT Registration?

Your company needs to cancel VAT registration when it stops fulfilling the VAT eligibility requirements. The cancellation of VAT registration occurs when trading stops or when you cease making VAT-taxable supplies or when you join a VAT group. Apart from penalties, you must inform HM Revenue and Customs (HMRC) about your decreased eligibility to register for VAT within 30 days when your situation changes.

Your request to HMRC to remove your VAT registration becomes possible when your taxable turnover reaches an amount below £88,000. Businesses based outside the UK cannot request cancellation of VAT registration when they continue goods or service supply operations to Britain for the next 30 days.

A limited company that undergoes VAT registration cancellation by HMRC receives corresponding termination of its Economic Operators Registration and Identification (EORI) number. After EORI cancellation, you will not be able to conduct import or export activities with your EORI number.

When is VAT Registration Cancellation Not Required?

Some specific circumstances exist where businesses do not have to terminate their VAT registration status. You should transfer your business’s registration to maintain the same VAT number instead of cancelling if you wish to continue using your current number. VAT registration cancellation for a VAT group does not require the elimination of the entire registration when one company within the group ceases operations because owners must use a VAT50-51 form to notify changes in VAT group information. The process of joining or forming a VAT group does not require any cancellations. The registration process for VAT requires filing both VAT50-51 forms to HM Revenue and Customs (HMRC) for all cases where you need to join VAT.

How to Cancel VAT Registration Online?

An online VAT de-registration process becomes available through multiple criteria, including the following factors:

• The dissolution of operations stops your current trading activities and your membership in VAT groups.
• The amount of taxable turnover you earn currently stands below £88,000.
• Your business has fully ceased operations that produce VAT-taxable goods and services.
• Most of your business sales qualify for VAT-exempt status, so you request this approval.

Your access to cancel VAT registration requires the use of your Government Gateway user ID together with your password. A correct process will help you complete VAT deregistration successfully without encountering any problems.

When You Must Cancel Your VAT Registration by Post?

The termination of VAT registration needs postal submission when specific conditions apply. A postal cancellation process must be used when either your business legal status changes or you sell your company and the new owner rejects keeping the current VAT registration number. Businesses that disband their VAT groups need to file their VAT50-51 form and cancellation request together. A business stopping operations because of liquidation needs a postal cancellation as a requirement.

You must use the VAT7 form to terminate your VAT registration through the postal service. The completion of all sections in the form becomes necessary for printing since the partial records cannot be saved automatically. The completed form requires printing afterward, where you need to join other documents before mailing them to HM Revenue and Customs (HMRC) at the address mentioned on the form.

What Happens After Cancelling VAT Registration?

Your request to cancel VAT submission with HMRC needs their official confirmation, which takes three weeks to process before obtaining an official cancellation date. The official cancellation date announced by HMRC is based on either when your business reason for terminating VAT status came into effect or on your specified cancellation date.

The VAT online account or postal correspondence from HMRC serves as confirmation of your cancellation, whether or not you have an online application. When using the cancellation date as a reference, you need to stop charging VAT, but you must preserve all VAT records for a period of six years. When HMRC establishes that your cancellation is not valid, they will immediately re-register you and expect payment of any VAT amount from the registration period.

Submitting Your Final VAT Return

You must file your last VAT return, which extends from the date of registration until the day of cancellation after your VAT registration termination. Your accounting needs to include both stock and assets you still possess at the cancellation date, provided that you have reclaimed VAT or can reclaim it on these assets that exceed £1000 in total VAT. You gained or had the right to gain VAT refund benefits upon their purchases. The VAT amount owed on these assets reaches more than £1,000.

The submission deadline for your final VAT return comes one month after cancellation unless you participate in the Cash Accounting Scheme with a two-month window. The final return submission does not need all invoices yet because further VAT claims can be processed separately.

 

Conclusion

Learning how to cancel VAT registration status enables business compliance with HMRC rules to prevent penalty charges. When you complete VAT registration cancellation, you need to file your last VAT return, then cancel VAT registration while keeping all records safe for at least six years. Correct procedures will enable your transition to a new status while satisfying all necessary requirements.

Disclaimer: All the information provided in this article on cancelling VAT registration, including all the texts and graphics, is general in nature. It does not intend to disregard any of professional advice.