Sometimes we decide to register our companies for VAT, whether it is due to having specific requirements and voluntarily registering, or if you hit the threshold for your company and are required to register (whether importing goods/services over £85,000 per year or supplying services/goods in the UK that makes your turnover go over £85,000). However, how do you de-register, and how do you know if you have qualified to do so? I recently had a client come to me and ask about whether or not they should voluntarily register for VAT, which prompted me to write this article, sharing the pros and cons to registering, as well as creating a useful document for SMEs who are considering VAT registration (thank you to the client for giving me the inspiration!) however, one thing that often can cause issues is when these companies decide they may wish to de-register from VAT. There are a few occasions when you decide to de-register, these may be:
No matter the reason, you need to take into consideration the facts, pros, and cons to no longer being VAT registered. If you are sure that your company is best suited without VAT, then you need to go through a de-registration process. Now, this can be done online or through a VAT7 form and sent by post to the HMRC, if your case is simple and you originally voluntarily registered, you may likely have a swift process and have your company de-registered by HMRC. This can take approximately 3 weeks, and they will reply within your messages tab on your online portal, or send the notification by post. You need to ensure your last/most recent quarter has been filed, your VAT paid (if there is any to pay) and that your records are up to date, before starting this de-registration process, as otherwise, they will instantly reject your request. There are also some other factors which may cause the HMRC to decline your request:
If you believe your company no longer needs to be registered for VAT, you need to ensure you have the reasoning for de-registration.
Once you have completed the de-registration and have had your request approved, you must submit a final VAT return for the period up to and including the de-registration date. You also need to account for any stock and other assets you have on this date if you could reclaim VAT when they were bought, or the total VAT due on these assets is over £1,000. You must also keep your VAT records for 6 years after the company has been de-registered.
