The VAT Deregistration process is the one which you need to follow if your company is currently registered for:

  • Suppling taxable items in the UK
  • Involves in distance sales to the customers who are not registered for VAT
  • Involves in relevant supplies of goods which are assets of a business.

There are situations in which you need to deregister your VAT registration. This VAT Deregistration can be voluntary or compulsory. A vender’s VAT registration may be cancelled if certain requirements are not fulfilled.

Types of VAT Deregistration:

VAT Deregistration can be of two types:

Voluntary deregistration:

A company or a vender may ask for a voluntary deregistration in the following circumstances:

  • If you ensure HMRC that the annual turnover of your company for the next year will not increase the specified limit.
  • If you end the production of some of your products or close a part of your business to ensure HMRC that the turnover will not exceed the limit.
  • If your turnover exceeds the limit but the amount of your taxable supplies is zero.

Compulsory deregistration:

For a VAT registered company, there is only some situation in which it has to deregister itself. These situations include:

  • Selling of a company
  • Change in the legal status
  • Joining of a VAT group
  • Disbanding of a VAT group
  • Stops the production of taxable supplies

Process of VAT Deregistration:

The process of VAT Deregistration is as follows:

Step 1:

The first step of VAT Deregistration is to get the application for the cancelation process. A person or a company needs to fill and submit   VAT 123e – Application for the cancellation of registration of a person in respect of all his enterprise’s form. This application needs to submit to the SARS branch where the company is registered.  The reasons due to which this deregistration is taking place should be mentioned on the form clearly.

Step 2:

After the submission of the application, the commissioner will issue a letter of acknowledgment for the company or vender. This letter will contain all the information regarding the date of cancelation and the final tax period. It will also provide the further instructions of the cancelation process. The vender or the company needs to charge the required amount of VAT on the products and services until the completion of the deregistration process.

Step 3:

As indicated by the commissioner, in the final tax period, the vender or company should declare output tax in field 1A of that VAT return. Exit VAT, which is the amount of tax on the goods in hand at the time of cessation, must be collected together with the addition of other output taxes.

If you are applying for voluntary VAT Deregistration, you need to provide HMRC with the responsible factor for the decrease in your company’s turnover. Once the VAT Deregistration process is complete, you need to register your company again if the annual turnover exceeds the limit.


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