How to cancel a VAT registration
In the UK, a business can opt out of a VAT registration if its annual turnover is less than £81,000, but it must register for VAT if its turnover exceeds £83,000. The difference between those figures is there to prevent businesses from falling in and out of the compulsory VAT zone over a few pounds.
If your business is VAT registered, but your turnover (excluding VAT) is now below £81,000, you can cancel your VAT registration. You may pick the date from which the deregistration takes effect, such as the last day of the month or quarter. But this date can’t be any earlier than the day on which you apply to HMRC to deregister.
When your business ceases to trade, you can cancel your VAT registration from the day you stop trading, but that is the only occasion on which the VAT registration can be cancelled with retrospective effect.
You can cancel your VAT registration online, or by completing a form VAT7 to sign and send to HMRC. We can help you with this.
But before you make the final decision to deregister from VAT, we should discuss your future plans. If you expect your sales to increase in the medium term, you may have to register for VAT again, so cancelling your current VAT registration may not be worthwhile.
After your VAT registration has been cancelled you won’t be able to recover VAT suffered on your business purchases.