If your annual taxable turnover drops below the threshold, you may be able to deregister. Currently, the deregistration threshold is £83,000 (20/21), below which you can choose to deregister for VAT. You can do this online through your Government Gateway account, or you can complete and return the VAT7 form by post. You must deregister for VAT if you are no longer eligible for VAT registration. Instances in which you must cancel your registration include:
- If you stop trading or making VAT taxable supplies
- If you join a VAT group.
HMRC will typically confirm the cancellation of your VAT registration within three weeks. With this confirmation, they will provide you with your official deregistration date, from which you won’t be liable for VAT, and you must stop charging. Remember to keep your VAT records for six years after deregistering, as HMRC may still ask for them within this period.
VAT7 form
The VAT7 is designed to be filled in on-screen. You can then print the completed form and send it off the HMRC.
HMRC will then confirm your official cancellation date, which will either be the date when your reason for cancelling took effect, such as the day you ceased trading or the date you requested to cancel if your cancellation was voluntary. Confirmation from HMRC usually takes approximately three weeks. Be sure to keep hold of all your VAT records for six years after you deregister, as tax inspectors may still request to see your papers in this time. When you cancel your registration, you will have to complete a final VAT return for the period leading up to the cancellation date.
Transferring Registration
It is possible to transfer VAT registration from one business to another. Both the person buying the company and the person selling the business must notify HMRC that they would like to transfer the VAT registration. A transfer application can be made online through your VAT online account, or by post using the VAT68. HMRC typically takes three weeks to respond.
International Trade that’s Excluded
If you trade with overseas companies, some of your sales may come outside of the scope of UK VAT. This means that UK VAT will not apply to your services. In these cases, you do not charge VAT on sales you make outside the UK, and you don’t include these figures in your VAT returns.
If you buy goods from another EU country, the supplier will not charge VAT. Instead, you must account for the tax in your VAT return. If you buy goods from a non-EU country, you will pay VAT when the goods enter the UK, which will be part of your input VAT. If the goods remain outside of the EU, they will be out of scope.
If you sell goods to a VAT registered business within the EU, the sale will be zero-rated. You still need to record these sales in your return.
