HMRC has recently updated its VAT information pack – HMRC VAT Notice 700/11. This contains some useful links and guidance on VAT registration as a whole, and also the criteria that should be considered when you cancel your registration.
Are there changes to your business that require you to update your VAT registration?
In a business’s life, many factors may affect a VAT registration. Our VAT and business tax experts can advise on when HMRC should be told of particular changes, but as a checklist, the following need consideration. Get in touch if:
– someone takes over your business
– you change legal entity
– you are registered as a VAT group
– you are also VAT registered and intend to create or join a group
– you are already VAT registered and want to join the Agricultural Flat Rate Scheme
– your business activity involves supplies of land and buildings
– you use the Tour Operators Margin Scheme
– you are a barrister
– you are an agent for other VAT-registered businesses
– you should not have cancelled your registration
– you need to register again
– you are a non-established taxable person.
The HMRC guidance also covers when you should cancel a VAT registration, and under what circumstances you can request cancellation – the differences between compulsory and voluntary VAT registration cancellation.
Source HMRC.
Compulsory VAT registration cancellation
You must cancel your registration if you’re no longer eligible to be VAT registered if:
– you have stopped trading, and you’re not part of a VAT group
– you have stopped making VAT taxable goods or services
– you are applying for an exemption if most or all of what you sell is VAT zero-rated.
This can be done online, or your agent can do this for you, but you’ll still be responsible for the accuracy of the information.
It should be done within 30 days if you stop being eligible, or you might be charged a penalty.
If you have an EORI number – HMRC will automatically cancel your Economic Operators Registration and Identification (EORI) number at the same time as they cancel your VAT registration.
Source HMRC.
Voluntary VAT registration cancellation
You can ask for voluntary VAT registration cancellation if any of the following occur:
– your taxable turnover in the next 12 months will not exceed the VAT registration cancellation limit.
> calculate your turnover on a VAT-exclusive basis, and
> tell HMRC why your turnover will fall eg. reduced opening times, lost contracts, or a change in your business practices.
– you close down part of your business.
– your turnover exceeds the registration limit but your taxable supplies are wholly or mainly zero-rated.
Source HMRC.
Further information
For the full guidance, see HMRC Notice 700/11
We’re here to help with specific queries. Our VAT experts would be happy to assess your position, and then follow up with a way forward.