{"id":3518,"date":"2018-11-13T10:00:29","date_gmt":"2018-11-13T10:00:29","guid":{"rendered":"http:\/\/my-brains.co.uk\/jackross\/?p=3518"},"modified":"2018-11-05T15:54:32","modified_gmt":"2018-11-05T15:54:32","slug":"deregistering-for-vat","status":"publish","type":"post","link":"https:\/\/my-brains.co.uk\/jackross\/deregistering-for-vat\/","title":{"rendered":"Deregistering for VAT"},"content":{"rendered":"

When and how to begin the process of deregistration<\/span><\/h2>\n

These days VAT thresholds are the subject of much speculation, with the Government concerned that many business owners deliberately choose to stay below the VAT-registration threshold.<\/p>\n

Limiting your ambition in this way might seem counter-intuitive \u2013 surely you want your business to get as big as possible?<\/p>\n

But it can make sense if you are seeking to make a sustainable living rather than get rich, perhaps by trading on online auction sites, or running a caf\u00e9 with limited opening hours.<\/p>\n

If your business\u2019s turnover is predicted to fall below \u00a383,000 over the next year, it can voluntarily deregister for VAT.<\/p>\n

You will need to deregister from paying VAT if your business ceases to trade.<\/p>\n

Voluntary deregistration<\/span><\/h2>\n

Your business can deregister if it expects taxable sales in the next 12 months to be less than the deregistration threshold, which stands at \u00a383,000 in 2018\/19.<\/p>\n

A voluntary deregistration from VAT can take effect from a current or future date.<\/p>\n

If no date is specified, it takes effect from the date HMRC receives the application to deregister, or a later date as agreed with the Revenue.<\/p>\n

You cannot backdate deregistration, even if you made a mistake in registering for VAT in the first place, or you could have applied to deregister earlier but didn\u2019t for whatever reason.<\/p>\n

Compulsory deregistration<\/span><\/h2>\n

If your business has ceased to trade and has no intention of making future taxable sales, it must deregister from VAT with effect from the final day of trading.<\/p>\n

However, there is scope for us to extend this date and therefore capture some final purchase invoices for the purposes of input VAT.<\/p>\n

There may well be professional fees to pay, which arrive after your business makes its last sale.<\/p>\n

Example<\/span><\/h3>\n

Ben and Pete are VAT-registered home fitters trading as a partnership, which makes \u00a390,000 in annual income. Both partners work full-time and they have no employees.<\/p>\n

On 31 October 2018, Pete decided to retire to leave Ben as the only fee earner. Pete plans to remain a sleeping partner.<\/p>\n

All things being equal, expected sales in the next 12 months will be \u00a345,000 so the business can deregister on 31 October 2018.<\/p>\n

This might be worthwhile if many of their customers are unable to claim input tax because they are private individuals.<\/p>\n

The partnership will also avoid having to enter the Making Tax Digital for VAT regime, which is due to take effect from 1 April 2019.<\/p>\n

Assets held on deregistration<\/span><\/h2>\n

If your business still holds assets and stock on the day it deregisters, there can be a VAT liability to pay as those assets are deemed to have been disposed of at their market value on that day.<\/p>\n

There are ways to reduce or eliminate the potential VAT liability, such as:<\/p>\n