VAT deregistration

Reasons for deregistering:

1. Compulsory deregistration. When a business ceased to trade, it is required to deregister from VAT.
2. Voluntary deregistration. When the taxable sales in the next 12 months falls within the deregistration threshold, ie £83,000, the business can choose to deregister from VAT. However, the voluntary deregistration only applies to a current or a future date. It cannot be on a retrospective basis.

Last VAT return when deregistering:

The business is required to complete a final VAT return up to the date when VAT is deregistered. If there are stock or other assets on the final day, the business needs to pay for the output tax. For example, the business purchased a machine for £6,000 plus VAT. Supposing the business adopts 25% depreciation rate. On the final day, the market value of the machine is £4,500 + £900 VAT. Since this is less than the minimum VAT figure of £1,000, no declaration is required.

Key points:

1. No output VAT due if the input tax was not reclaimed at the first place.
2. No output VAT due on zero rate or exempted goods.


1. Can I reclaim VAT on post deregistration expense? For example. I have deregistered on 1st of July, but I received an invoice from my accountant on the 5th of July?
If the expense is related to the period when the business was registered, yes.

2. What if I cannot receive the money from my customers?
You can claim bad debt relief.

3. Do I need to deregister for VAT if I change the legal entity, from a sole trader to a limited company?
You can choose to deregister for VAT OR you can continue using the old VAT number. By doing so, you are subject to the liability under the previous owner.

(last edited on 06 Sep 2017)


The above information and calculations are for illustrative purposes only. No liability is accepted by O’Brien S & Co Ltd for any actions or losses from investment in reliance on the information and calculations. Consult a qualified professional financial advisor before making any financial decisions. O’Brien S & Co Ltd holds the copyrights in all materials on the website. All rights reserved.

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