Key facts
- You can deregister if turnover falls below £88,000.
- You must deregister if you stop making taxable supplies.
- You may need to account for VAT on stock and assets held at deregistration.
- Submit a final VAT Return covering up to your deregistration date.
When Can You Deregister?
You can apply to cancel your VAT registration if:[1]
- Your taxable turnover in the next 12 months will be below £88,000
- You’ve stopped trading or making taxable supplies
- You’ve closed your business
- You’ve transferred your business as a going concern (TOGC)
When Must You Deregister?
You must cancel your registration if you stop making taxable supplies altogether. This includes when you:[2]
- Close down the business
- Change the legal entity (e.g. sole trader incorporates as a limited company)
- Only make exempt supplies going forward
How to Deregister
- Apply online through your Government Gateway VAT account
- Tell HMRC the date you want deregistration to take effect
- HMRC will confirm the cancellation date
VAT on Stock and Assets
When you deregister, you may need to account for VAT on any stock and assets on which you previously reclaimed input VAT. This is only required if the total VAT on these items exceeds £1,000.[3]
Example: You hold £8,000 of stock (ex VAT) when you deregister. The VAT at 20% is £1,600. Because this exceeds £1,000, you must include it as output VAT on your final return.
Your Final VAT Return
You must file a final VAT Return covering the period up to your deregistration date. Include:
- All sales and purchases up to the cancellation date
- VAT on stock and assets (if applicable)
- Any outstanding adjustments
After Deregistration
- Stop charging VAT from the day after your deregistration date
- Remove your VAT number from invoices and stationery
- Keep your VAT records for 6 years
- You can re-register later if your turnover rises again
Frequently Asked Questions
When can I deregister from VAT?
You can apply to deregister if your taxable turnover in the next 12 months will be below £88,000, or if you have stopped trading or making taxable supplies altogether.
Do I have to pay VAT on stock when I deregister?
You may need to account for VAT on stock and assets on which you previously reclaimed input VAT, but only if the total VAT on these items exceeds £1,000.
How do I cancel my VAT registration?
Apply online through your Government Gateway VAT account. Tell HMRC the date you want deregistration to take effect, and file a final VAT Return covering up to that date.
How long must I keep VAT records after deregistering?
You must keep your VAT records for 6 years after you deregister. You should also remove your VAT number from invoices and stationery.
Further Reading
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Sources
- Cancel your VAT registration — GOV.UK
- VAT deregistration — GOV.UK
- VAT guide (VAT Notice 700) — GOV.UK