VAT7 Form: Cancel Your VAT Registration
- Adil Akhtar
- Dec 10, 2023
- 21 min read
Updated: Apr 24
Index
The Audio Summary of the Key Points of the Article:
Understanding the VAT7 Form: The Starting Point for Cancelling Your VAT Registration in the UK
If you’re wondering how to cancel your VAT registration in the UK, here’s the straight answer: you must submit a VAT7 form to HMRC. Whether you're winding down a business, falling below the deregistration threshold of £88,000 (as of March 2025), or switching structures (say, sole trader to limited company), the VAT7 is your go-to form for formally exiting the VAT system. But the process isn’t just ticking boxes—it affects your cash flow, tax status, refunds, and payroll. Let's break this down like a real-world guide, not a government leaflet.
What Is VAT Deregistration—and Who Needs to Worry About It?
Why businesses cancel VAT registration
Cancelling VAT registration means you’re telling HMRC, “Hey, I no longer meet the conditions for being VAT registered.” This might be because:
You’ve stopped trading.
Your taxable turnover fell below £88,000 over the past 12 months and isn’t expected to rise again soon.
You’re changing business structure—like switching from a sole trader to a limited company.
You’re selling or transferring the business.
Or even: You registered voluntarily and now it’s not worth the admin.
And guess what? As of 2025, more than 635,000 UK VAT-registered businesses
operate below the £90,000 VAT registration threshold—many are missing out on legitimate deregistration opportunities that could save thousands in unnecessary admin and overpaid VAT.
When Must You Cancel VAT Registration?
HMRC's hard rules
HMRC says you must cancel your VAT registration (using the VAT7 form) if:
You’ve ceased trading completely or stopped making VAT-taxable supplies.
You join a VAT group, as only one registration is allowed for the group.
You sell your business and the buyer takes over the VAT registration.
The legal entity of your business changes (e.g., sole trader to limited company).
In these cases, you’re legally required to notify HMRC within 30 days—delaying this can trigger penalties, especially if you're still collecting VAT without authorisation.
When Must You Cancel VAT Registration?
When Can You Cancel VAT Registration?
The £88,000 deregistration threshold (March 2025)
You can voluntarily deregister if your taxable turnover for the last 12 months was under £88,000, and you're confident it’ll stay below this threshold.
Here’s a quick breakdown from the latest HMRC updates:
Type of Threshold | Amount (March 2025) |
VAT Registration Threshold | £90,000 |
VAT Deregistration Threshold | £88,000 |
If your turnover went over £90,000 and dropped shortly after, HMRC might refuse deregistration unless you can prove the drop is long-term or permanent (say, a contract was cancelled or your niche shrank).
Real-world scenario
Example: Trevor McLachlan, a niche events planner from Bristol, voluntarily registered for VAT in 2020 when his business peaked. Post-pandemic, events dried up, and by late 2024, his annual turnover was down to £74,000. After cross-checking future projections, Trevor submitted VAT7 to HMRC in January 2025. He attached projected invoices showing he wouldn't exceed the £88,000 deregistration limit for the year ahead. HMRC approved within two weeks.
What Happens When You Submit Form VAT7?
The step-by-step process
Online submission preferred – You can complete the VAT7 form online via your Government Gateway account.
HMRC typically responds in 10–30 working days.
Your VAT account remains active during the review—continue collecting and paying VAT until you receive written confirmation.
If accepted, HMRC will:
Confirm your official deregistration date.
Ask for a final VAT Return (very important—don’t skip this!).
Tell you what to do with remaining VAT on assets (more on this below).
What Happens When You Submit Form VAT7?
What Should Be on Your Radar After Cancelling?
VAT on assets and stock
Here’s a kicker many overlook: if you’ve claimed VAT on business assets (e.g., a van, tools, IT gear) and their total market value exceeds £5,000 at the point of deregistration, you may have to pay VAT back. It’s called output tax on deemed supplies.
Example: Let’s say your home office equipment and van have a combined market value of £6,800. You might owe 20% VAT on that—£1,360—even if you're no longer trading.
Payroll & PAYE impacts
If you're an employer, deregistering for VAT has no direct effect on your PAYE or payroll operations—but there’s an admin chain reaction:
You may need to update payroll software or bookkeeping systems.
Employee expense claims involving VAT (e.g., travel expenses) should be adjusted to exclude VAT reclaim options post-deregistration.
Emergency Tax, Refunds, and Transition Period Woes
Emergency tax and refunds
If you submitted VAT returns quarterly and deregistered mid-period, HMRC may owe you money—especially if you prepaid VAT based on expected invoices that never materialised.
Also, any VAT refund claimed after your deregistration date needs rock-solid evidence. Incomplete records or misreporting may trigger a compliance check—so keep everything tight.
Pro tip: File your final return with precise stock valuations and invoice adjustments, and include explanatory notes to speed up approval.
What's Missing in Most Advice? Niche Scenarios That Matter
Case Study: Dealing with a VAT Deregistration Denial
Example: Hilary Redfern, a freelance costume designer in Newcastle, tried to deregister voluntarily in February 2025. HMRC declined the VAT7 form because her earnings from a Netflix costume gig the previous November pushed her rolling 12-month turnover just over £88,000. Even though that job was one-off, HMRC required proof her future turnover would stay below the threshold for 12 months. A letter from her agent confirming a six-month contract freeze helped win approval on a second try.
Key HMRC Contacts & Support Tools
Cancel your VAT registration
VAT Notice 700/11: Cancelling your registration (Updated May 2024)
UK VAT Deregistration Trends & Analysis (2019-2023)
Interactive Business Statistics Dashboard
Managing VAT Post-Deregistration: What Happens After Submitting the VAT7 Form?
So, you've submitted your VAT7 form to HMRC—nice one! But hang on, what now? Whether HMRC approves or rejects your deregistration request, there are a whole host of tax, financial, and legal issues you need to keep an eye on. This isn’t just about “closing a tax account”—this affects cash flow, client relationships, PAYE, and even how you invoice.
What Happens After Your VAT7 Form Is Accepted?
Expect this official sequence from HMRC
If HMRC accepts your VAT deregistration request, here’s what you can expect:
HMRC confirmation letter or online message – stating your official deregistration date.
A prompt to submit your final VAT Return up to that deregistration date.
Notification of any VAT payable on stock or assets you’re keeping.
Closure of your online VAT account after the final return is processed.
And here’s something crucial: you must stop charging VAT on invoices from your deregistration date. That means changing your invoicing templates immediately—issuing VAT-inclusive invoices post-deregistration is a serious no-no.
Step By Step Process After Your VAT7 Form Is Accepted
Submitting Your Final VAT Return
The last lap—don’t mess this up
This return must cover everything from the start of your last VAT period up to the exact date of deregistration. It needs to include:
All sales and purchases made in that final period.
Adjustments for any overpaid or underclaimed VAT.
VAT on business assets you’re keeping if they’re worth more than £5,000 in total.
Let’s break that last one down...
VAT on retained assets: the £5,000 trap
If your business still owns items you've claimed VAT on (like a vehicle or laptop) and their current value exceeds £5,000, you’ll need to repay output VAT on those items. Use the current market value, not purchase cost.
Example: Iain Faulkner, a property surveyor from Leeds, kept a Land Rover Discovery worth £6,800 post-deregistration. He originally claimed £6,000 of VAT on it. Since it was worth over £5,000 when deregistering, he had to repay 20% VAT on the £6,800 value—a whopping £1,360.
What If HMRC Rejects Your VAT Deregistration Request?
Rejections do happen—and here’s why
HMRC may reject your VAT7 form if:
Your turnover hasn’t genuinely dropped below £88,000, or if recent spikes suggest it might rise again.
You provide insufficient future income projections.
You didn’t fill the form out properly or missed key documents.
You deregistered for the wrong reason (e.g., trying to avoid a VAT bill).
How to fix a rejection
If rejected, HMRC will explain why. You can:
Amend and resubmit the VAT7 form.
Submit supporting documents—like future sales contracts, cancellation letters, or forecasts.
Request a review or appeal, especially if you believe HMRC’s judgement doesn’t reflect your actual business situation.
Case example: Siobhan Leary, a Brighton-based independent fitness coach, applied to deregister in December 2024. HMRC rejected it because her previous quarter included a £35,000 corporate wellness workshop that skewed her rolling turnover above £88,000. With a written confirmation from the client that it was a one-time deal, HMRC reversed their decision on appeal.
Handling VAT After Deregistration: Common Mistakes & Fixes
1. Invoicing with VAT—by mistake
One of the most common post-deregistration mistakes is sending invoices with VAT still included. Here’s what to do if it happens:
Re-issue corrected invoices without VAT.
Notify clients—especially those reclaiming VAT—so they can amend their records.
If the client has already paid the VAT, you must refund it.
2. VAT on recurring payments or subscriptions
If you have retainers or recurring billing, you need to update clients and remove VAT from future payments.
Tip: Clearly mark invoices post-deregistration with “VAT Not Applicable – Business Deregistered on [Date]” to avoid confusion.
Claiming VAT Refunds After Deregistration
Yes, it’s possible—but with conditions
If you incur business-related VAT after deregistration, you may be able to claim it back using VAT form VAT427, but:
The purchases must relate to the business as it was before deregistration.
You must keep full VAT receipts.
Claims must be submitted within four years of deregistration.
Example: Neville Haddock, a freelance illustrator, paid for printing materials a week after deregistering. Since the order was for a contract signed pre-deregistration, he successfully claimed £128 back using VAT427.
Impact on PAYE, Payroll & Contractor Payments
Is your business also an employer?
While PAYE isn’t directly affected by VAT deregistration, here are a few payroll-related admin changes to keep on your radar:
Expense reimbursements: Any VAT component on expenses (like travel or meals) is no longer reclaimable, which could reduce net claims.
Accounting software updates: Disable VAT modules to avoid processing errors.
P11Ds and benefits-in-kind valuations may need minor tweaks if VAT was part of the calculation base.
Deregistering But Still Selling Stuff?
Occasional sales still count
If you’re still selling old stock or leftover assets—even after deregistration—these may still attract VAT liability if they relate to a VAT period and you originally claimed input VAT.
Quick tip: Keep detailed records of all post-deregistration sales. If you sell something major (like equipment or property), HMRC may ask if VAT is due, especially if the asset had a high input VAT reclaim.
Final Word on Deregistration Timelines
Key Task | Deadline |
Submit VAT7 form | Within 30 days of eligibility |
Stop charging VAT | From the deregistration date |
Submit final VAT Return | By the usual return due date |
Repay VAT on assets (if required) | With final VAT return |
Claim VAT refund (if applicable) | Within 4 years post-deregistration |
UK VAT Deregistration Trends (2019-2023): Interactive Data Analysis
How to Complete VAT7 Form – A Question By Question Guide for Cancelling VAT Registration in the UK
The VAT7 form is the official way to cancel your VAT registration in the UK. While it looks straightforward, many applications get delayed or rejected due to missing info or vague explanations. Below is a full walk-through of each question, with suggested responses where appropriate.
Page 1: Business Identification
Question 1 – What is your VAT Registration Number?
Sample Answer: 123456789👉 This is your 9-digit VAT number—found on your VAT registration certificate or previous returns.
Question 2 – Full Name of Business
Sample Answer: “Arkwright & Sons Ltd”👉 If you're a sole trader, give your own name. For partnerships, list all partners if there's no trading name.
Question 3 – Trading Name (if different from Q2)
Sample Answer: “Arkwright Building Supplies”👉 Only fill this in if you operate under a different name.
Question 4 – Principal Place of Business
Sample Answer:1 Builders LaneManchesterM3 4HQPostcode: M3 4HQPhone: 0161 222 9876Mobile: 07700 900123👉 This should be your trading address, not your accountant’s.
Question 5 – Correspondence Address (if different)
Sample Answer: Leave blank unless you want HMRC letters sent elsewhere—like to your accountant.
Page 2: Why You're Cancelling Registration
Question 6 – Tick Your Reason for Cancelling
Example: Tick box B: "My taxable turnover in the next 12 months will be below the current deregistration limit."👉 Choose the one most applicable. Each option sends you to a different set of follow-up questions.
If You Ticked Box A (Ceased Trading)
Question 7(a) – Date You Ceased Trading
Sample Answer: 31 01 2025👉 Enter the exact date you issued your last invoice or made your final sale.
Question 7(b) – Want a Later Deregistration Date?
Optional: Only fill this if you want deregistration delayed (e.g., finalising admin tasks).Sample Answer: 28 02 2025
If You Ticked Box B (Turnover Below Threshold)
Question 8(a) – Expected Turnover Next 12 Months
Sample Answer: £78,000👉 Must be under £88,000 (as of March 2025). Round realistically.
Question 8(b) – Why Will It Be Under the Limit?
Sample Answer: "Lost two long-term supply contracts. Operating hours reduced to 2 days a week. No upcoming major projects confirmed."
👉 Be specific. “Fewer sales” or “business slowdown” won’t cut it. HMRC needs measurable reasons.
If You Ticked Box C (Now Only Making Exempt/Out-of-Scope Supplies)
Question 9 – When Did You Stop Making Taxable Supplies?
Sample Answer: 01 03 2025👉 If switching to entirely exempt income (e.g., private tuition), this is your key date.
If You Ticked Box D (Mainly Zero-Rated Supplies)
Question 10(a) – Nature of Your Supplies
Sample Answer: "Exporting children's clothing to Ireland and Spain (zero-rated goods)."
Question 10(b) – Will You Be in Repayment Status?
Sample Answer: Yes👉 This affects your eligibility for VAT exemption.
Question 10(c) – Explain if You Ticked "No"
👉 Use the back of the form to justify exemption if you're not expecting repayments but still want deregistration.
If You Ticked Box E or F (Change of Legal Entity or Sold Business)
Question 11(a) – Date of Legal Change or Transfer
Sample Answer: 15 02 2025
Question 11(b) – Describe the Change
Sample Answer: "Changing from sole trader to limited company structure."
Question 11(c) – Name/Address of New Owner
Sample Answer: “Arkwright & Sons Ltd1 Builders Lane, Manchester, M3 4HQ”
Question 11(d) – New VAT Number (if known)
Sample Answer: 987654321
Question 11(e) – Is New Owner in a VAT Group?
Sample Answer: No
Question 11(f) – Were Assets Transferred?
Sample Answer: Yes
If You Ticked Box G or H (VAT Grouping)
Question 12 – Joining a VAT Group
(a) Date joined: 01 04 2025
(b) Rep member name: “Northern Retail Holdings Ltd”
(c) Group VAT number: 555123456
Question 13 – VAT Group Disbanded
Date: 31 03 2025
If You Ticked Box I (Other Reason)
Question 14 – Provide Reason & Deregistration Date
Date: 01 03 2025
Reason (write on back): "Switching from VAT-registered trading to non-taxable property rental business."
Page 3: Financial Disclosures & Compliance
Question 15 – Do You Have an Option to Tax Property?
Sample Answer: No👉 If you’ve opted to tax a building and reclaimed VAT, this affects final calculations.
Question 16 – Do You Use Cash Accounting?
Sample Answer: Yes👉 Important for your final VAT return—HMRC wants to know how you’ve accounted for sales and purchases.
Question 17 – Estimate of VAT-Inclusive Value of Assets
Sample Answer: £6,200👉 This includes office equipment, vehicles, stock, or buildings with VAT previously reclaimed.
Question 18 – Changed Bank Details?
Sample Answer:
Account: 12345678
Sort code: 12-34-56👉 If you're due a refund, HMRC needs current account details.
Page 4: Final Bits
Further Information Section
👉 Use this for explanations, forecasts, or clarifications. Reference question numbers clearly.
Example:"Q8(b): Contracts with three construction clients were terminated as of Jan 2025. Projected income falls under threshold."
Declaration Section
Signature: Hand-sign with a pen (if posting).
Date: Today’s date
Full Name: Print in CAPITAL LETTERS
Where to Send the Form
Address: Grimsby Deregistration Unit Imperial House77 Victoria StreetGrimsbyLincolnshireDN31 1DB
Or submit it online via your Government Gateway VAT account.ts.
VAT7 Form vs. Online VAT Deregistration: What’s the Best Way to Cancel VAT Registration in the UK?
So, you’ve made the call—it’s time to cancel your VAT registration. Whether you’re closing your business, falling below the deregistration threshold, or switching structures, the big question remains: Should you submit the paper VAT7 form or do it online through your Government Gateway account?
Both methods lead to the same destination, but the journey is a bit different. Let’s break it down in real human terms—no legal jargon, just useful comparisons.
The Two Main Routes to VAT Deregistration
Paper-based submission via VAT7 form – The old-school method. You download, complete, and post the form to HMRC’s Grimsby Deregistration Unit.
Online cancellation via Government Gateway – The digital route. You log into your business tax account and submit a deregistration request online.
Now, let's compare both options side-by-side using real criteria that UK taxpayers care about.
1. Speed of Processing
Online Method ✅ Faster, by far
HMRC typically processes online VAT deregistration requests in 10 to 15 working days, and sometimes even faster if no manual checks are required.
Paper VAT7 submissions, however, are slower, with an average turnaround time of 3 to 4 weeks—and longer if any fields are missing or unclear.
Real-world scenario: Carl Densley, a freelance digital artist from Bristol, submitted a VAT7 form by post in January 2025. It wasn’t acknowledged until mid-February. Meanwhile, his friend Evie, who used the online route, got deregistered in 9 days.
Verdict: If time is of the essence—go digital.
2. Error-Handling and Rejections
Online Method ✅ Built-in error detection
The online system guides you through the process step-by-step. It won’t let you proceed with missing mandatory info, which greatly reduces the chance of rejection or delay.
Paper-based VAT7 forms, on the other hand, are rejected frequently for things like:
Leaving a box empty
Unclear handwriting
Invalid deregistration reasons
Forgetting to sign the form
Verdict: Online wins again for reducing human error.
3. Supporting Documentation
VAT7 Form ✅ Easier for attaching extras
Some deregistration cases—like those involving property, stock transfers, or legal entity changes—require you to include:
Letters of explanation
Sales forecasts
Legal contracts
Asset lists or valuations
While you can upload supporting evidence when submitting online, the paper method is more forgiving if you're sending multiple physical documents. Plus, some complex situations (like requesting a deregistration from a backdated or future date) are easier to justify on paper, with a cover letter.
Example: Hilary Manners, who sold her pub and deregistered from VAT in early 2025, opted for a VAT7 form so she could attach her business sale agreement and solicitor’s confirmation—all in one envelope.
Verdict: Paper VAT7 wins for complex or sensitive deregistration cases.
4. Future Deregistration Dates
Both Methods ✅ Allow date customisation, with caveats
Whether you’re submitting a VAT7 form or using the online portal, you can request a specific future deregistration date. However, the VAT7 gives you more flexibility to explain why.
On paper, you can use the “additional information” section to argue your case and attach evidence.
Online, you're usually limited to dropdowns and short-text boxes.
Important Tip: If you’re applying for voluntary deregistration and want it to take effect from a future date (e.g., end of the tax quarter), you need to justify it. This is harder online.
Verdict:VAT7 is more customisable if you're planning ahead.
5. Confirmation and HMRC Communication
Online Method ✅ Real-time tracking
Once you deregister online, HMRC provides instant confirmation that your application has been submitted. You can log back in anytime to check your deregistration status or see if HMRC needs more info.
Paper forms? You’re in the dark until you get a letter—often weeks later. If it gets lost in transit or delayed, you’ll need to phone HMRC to chase it.
Verdict: Online offers way better visibility and peace of mind.
6. Suitable Use Cases
Let’s take a closer look at which option suits which kind of business owner:
Scenario | Best Method | Why? |
Quick closure of small sole trader business | Online | Fast and simple |
Complex property-based business with option to tax | VAT7 Form | More space for explanation and documents |
Deregistering from a VAT group | VAT7 Form | Often involves VAT50/VAT51 forms too |
Just fell below dereg threshold and need proof | Online | Auto-checks turnover limits |
Transferring business to a family member | VAT7 Form | You can attach supporting letters/contracts |
Needing to reclaim VAT on final expenses | Either | Depends on complexity of the claim |
7. HMRC Preferences and Policy
Interestingly, HMRC prefers the online method—and their website gently nudges you in that direction. They’ve invested heavily in digitising tax services under the “Making Tax Digital” initiative.
That said, they still process thousands of VAT7 paper forms per year, particularly from:
Older businesses without digital access
Landlords and property developers
Businesses changing legal entities
Important Note: In 2025, HMRC is expected to phase out paper VAT7 forms for standard sole traders and small businesses—so if you can go digital now, it’s future-proof.
Summary Table – Paper VAT7 vs. Online
Feature | Online Method | VAT7 Form (Paper) |
Speed of submission | ✅ Faster (10–15 days) | ❌ Slower (3–4 weeks) |
Error prevention | ✅ Built-in checks | ❌ Manual, prone to error |
Complex explanations | ❌ Limited | ✅ Allows full context |
Supporting documents | ❌ Limited upload space | ✅ Easy to include extras |
Tracking & visibility | ✅ Real-time | ❌ Manual follow-up only |
Deregistration date justification | ❌ Limited field space | ✅ Full notes allowed |
Best for landlords/legal transfers | ❌ Not ideal | ✅ More flexibility |
Future-proofing | ✅ MTD-compliant | ❌ May be phased out |
Final Advice: Which One Should You Choose?
Go Online if:
Your VAT registration is simple (sole trader, micro-business)
You’re below the dereg threshold and staying under
You need fast results and don’t need to send documents
Use VAT7 Form if:
Your deregistration case is complex or involves property/legal issues
You want to attach contracts, letters, or explain future projections
You’re transferring a business or need to control the deregistration date with supporting info
Whatever route you choose, the key is accuracy. Submit complete and honest info, keep copies of everything, and prepare your final VAT return promptly after deregistration is confirmed.
And remember—until you receive that VAT35 confirmation notice, you’re still legally obliged to charge and account for VAT. Don’t jump the gun!
UK VAT Deregistration Statistics: Online vs. Paper Methods (2020-2024)
How a VAT Accountant Can Help You With VAT Deregistration
Navigating the complexities of Value Added Tax (VAT) can be challenging for any business, particularly when it comes to deregistration. A VAT accountant is an indispensable resource in this process, offering expert guidance and ensuring compliance with HMRC regulations. This article explores how a VAT accountant can assist businesses in the UK with VAT deregistration.
Understanding VAT Deregistration
VAT deregistration involves canceling your VAT registration with HM Revenue and Customs (HMRC) in the UK. This step is necessary when a business stops trading, reduces its taxable turnover below the VAT threshold, changes its legal structure, or joins a VAT group. While the process might seem straightforward, it involves nuanced regulations and specific procedures that need careful attention.
Assessing Eligibility and Timing
One of the primary roles of a VAT accountant is to help you determine whether your business is eligible for VAT deregistration. They will assess your taxable turnover and predict if it's likely to fall below the current threshold of £85,000, taking into account any anticipated fluctuations in your business operations. They will also advise on the best timing for deregistration to optimize your financial and tax position.
Filling Out and Submitting Form VAT7
Form VAT7 is the official document for VAT deregistration. A VAT accountant ensures that this form is filled out accurately and completely. They will guide you through each section, ensuring that all necessary details, such as the reason for deregistration and information on stocks and assets, are correctly provided. Their expertise minimizes errors and omissions, which can lead to delays or issues with HMRC.
Managing VAT on Stocks and Assets
When deregistering, you must account for VAT on any stock and assets you hold. A VAT accountant can help calculate the VAT due on these items, ensuring that you comply with the regulations and avoid any unexpected tax liabilities.
Advising on Post-Deregistration VAT Implications
Deregistering for VAT can have significant implications for your business's pricing strategy, cash flow, and accounting processes. A VAT accountant can provide valuable insights into how deregistration will affect your business operations and advise on necessary adjustments in pricing, invoicing, and financial reporting.
Ensuring Compliance and Avoiding Penalties
VAT deregistration has to be done in compliance with HMRC's guidelines. A VAT accountant ensures that all the steps are taken within the stipulated deadlines to avoid penalties. They can also handle any communication with HMRC, including responding to queries or resolving any issues that may arise during the deregistration process.
Handling Final VAT Returns
A final VAT return must be submitted after deregistration, covering the period up to the deregistration date. A VAT accountant can prepare and submit this return on your behalf, ensuring that it accurately reflects your final VAT liabilities or refunds due.
Providing Ongoing Support and Advice
Even after successful VAT deregistration, a VAT accountant can continue to provide valuable support. They can assist with regular tax planning, advise on re-registration if your business circumstances change, and offer ongoing financial advice tailored to your business's evolving needs.
VAT deregistration is a critical process that requires meticulous attention to detail and a deep understanding of VAT laws. A VAT accountant plays a crucial role in guiding businesses through this process, ensuring compliance, and providing strategic advice. Their expertise not only facilitates a smooth deregistration process but also helps businesses adapt their strategies post-deregistration, paving the way for sustained financial health and compliance in the ever-evolving landscape of UK taxation.
Summary of All the Most Important Points Mentioned In the Above Article
You must submit Form VAT7 to cancel your VAT registration with HMRC, either due to ceased trading, falling below the £88,000 deregistration threshold, or changing your business structure.
HMRC requires a valid reason and evidence when applying for VAT deregistration, especially for voluntary applications or those involving future or backdated deregistration dates.
If your VAT deregistration is accepted, you must submit a final VAT return, account for VAT on retained assets over £5,000, and stop issuing VAT-inclusive invoices from the deregistration date.
HMRC may reject deregistration if turnover projections are unclear or unsupported, but reapplication is possible with better documentation or appeal.
Deregistered businesses must still keep detailed VAT records and may need to repay VAT on assets or stock, especially if input VAT was previously reclaimed.
Post-deregistration, you may still claim VAT refunds using Form VAT427 for qualifying business purchases made before deregistration.
The paper VAT7 form is better suited for complex cases requiring detailed explanations or physical attachments, such as legal entity changes or business transfers.
Online deregistration is faster, error-resistant, and preferred by HMRC for straightforward cases, offering real-time tracking and quicker processing.
Deregistering doesn’t affect PAYE schemes but may require accounting updates, especially for expense claims and benefit reporting.
Until HMRC confirms deregistration with a VAT35 notice, businesses must continue charging and submitting VAT as usual to stay compliant.
FAQs
Q1. Can you cancel your VAT registration if your business is temporarily inactive but not closed?
A: Yes, you can cancel your VAT registration if your business has no taxable supplies and won’t be trading in the foreseeable future, but HMRC may request evidence that the inactivity is long-term rather than temporary.
Q2. How long does HMRC take to confirm VAT deregistration after applying online?
A: HMRC usually confirms online VAT deregistration within 10 to 15 working days, though it may take longer if your case requires manual review.
Q3. Can you cancel VAT registration if your business is moving abroad?
A: Yes, if your business is no longer making taxable supplies in the UK, you can cancel your VAT registration even if it relocates overseas.
Q4. What happens if you forget to cancel VAT registration after stopping trading?
A: If you fail to cancel VAT registration when required, HMRC may issue penalties and continue expecting VAT returns until you officially deregister.
Q5. Do you need to cancel VAT registration if you become VAT exempt?
A: Yes, you must cancel VAT registration if all your supplies become VAT exempt or fall outside the scope of UK VAT, and you no longer need to charge VAT.
Q6. Can you cancel VAT registration retrospectively?
A: You can request a backdated deregistration date, but HMRC will only approve it with valid reasons and supporting documentation such as invoices or contracts.
Q7. Is there a fee for cancelling VAT registration in the UK?
A: No, there is no fee charged by HMRC to cancel your VAT registration either via VAT7 form or the online portal.
Q8. What is the difference between cancelling and transferring a VAT registration number?
A: Cancelling ends your VAT registration entirely, whereas transferring allows the VAT number to move to a new legal entity as part of a business sale or restructure.
Q9. Can you cancel VAT registration while still being registered for other taxes?
A: Yes, cancelling VAT registration does not affect your registration for other taxes like PAYE, Corporation Tax, or Self Assessment.
Q10. What happens to outstanding VAT returns after you cancel your registration?
A: You are still required to submit any outstanding VAT returns, including the final one, and pay any VAT due by the deadline set by HMRC.
Q11. Can a VAT-registered business in Northern Ireland cancel VAT separately for EU trade?
A: No, VAT registration and cancellation apply to the whole UK VAT system; separate deregistration for EU trade isn't applicable under current rules.
Q12. Do you still need to keep VAT records after cancelling VAT registration?
A: Yes, you must retain your VAT records for at least 6 years after deregistration in case of future HMRC enquiries or audits.
Q13. Can your accountant cancel VAT registration on your behalf?
A: Yes, but only if you have authorised them with HMRC as your agent through your business tax account.
Q14. Will cancelling VAT registration affect your ability to invoice existing clients?
A: You can still invoice clients, but you must stop charging VAT on invoices dated after the effective deregistration date.
Q15. Can you cancel VAT if you voluntarily registered and now regret it?
A: Yes, if your turnover is below the £88,000 deregistration threshold and you no longer wish to stay VAT registered, you can apply for cancellation.
Q16. Will HMRC send a certificate after VAT deregistration is completed?
A: Yes, HMRC will issue a VAT35 confirmation notice stating your VAT registration has been cancelled and confirming the final deregistration date.
Q17. Can you register for VAT again after cancelling it?
A: Yes, you can reapply for VAT registration at any time, either voluntarily or if your turnover exceeds the registration threshold.
Q18. Are there any restrictions on cancelling VAT if you’re part of the Flat Rate Scheme?
A: No restrictions apply specifically due to Flat Rate Scheme use, but you must still follow standard deregistration rules and file your final return correctly.
Q19. What should you do if you realise you made a mistake on your VAT7 form?
A: Contact HMRC immediately to amend the form or supply additional information; errors can delay or invalidate your deregistration request.
Q20. Does cancelling VAT registration impact your business credit rating?
A: No, cancelling VAT registration does not directly impact your credit score, though some lenders may assess VAT status as part of overall financial health.
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