Cancel VAT Registration UK: Online Process, Deregistration Threshold

What Is Cancel VAT Registration?

Cancel VAT registration is the process of formally removing its business from the VAT register of HMRC. This process, known as deregistering from VAT, applies when your business stops trading, replaces its activities, or VAT comes below the deregistration threshold. Sometimes, businesses voluntarily choose to cancel VAT registration if their taxable turnover is below £ 90,000 and prefer a simple accounting setup. Cancelling VAT registration helps you to avoid unnecessary VAT obligations, but you have to follow HMRC procedures properly. 

Once you apply to cancel VAT registration – usually using VAT 7 form HMRC reviews your request. If approved, they will confirm your deregistration date, often the day you applied or when you need VAT registration. After cancelling, you have to submit a final VAT return and account for any VAT due to business assets such as stocks or equipment. It is important to keep VAT records for at least six years even after delegation, as HMRC can still request them.

When Should You Consider It?

When your taxable output drops below the VAT deregistration level, you should think about terminating your VAT registration. If, over the past 12 months, your sales have fallen below £88,000, you have the option to voluntarily cancel your VAT registration. Cancelling a VAT registration may occasionally be required.

For example, HMRC expects you to apply for deregistration if you stop producing VAT-taxable transactions altogether. Another crucial aspect is that, unless the new owner decides to keep it, you must terminate your VAT registration when your company is sold.

How Can VAT Registration Be Cancelled Online Through HMRC?

HMRC’s VAT services website makes it simple to cancel your VAT registration online. To log in, you require a Government Gateway ID.

How to cancel VAT registration online:

• Visit your HMRC online services account and log in.
• From your account overview, choose ‘VAT.’
• Select the option to “Cancel VAT registration.”
• To cancel your VAT registration, complete the online application.
• Indicate why the cancellation was made (e.g., turnover below threshold).
• Verify the date on which you would like VAT deregistration to go into effect.
• Fill in the request.
  

This method is called online VAT registration and is the most convenient approach for UK businesses. If HMRC accepts your request, you will usually get confirmation within 3 weeks. Ensure that all VAT returns are filed before cancellation of online VAT registration, or your application may be delayed.

What Is the VAT 7 Form, and How Do You Complete It?

When a business wants to cancel its VAT registration with HMRC, it utilises the VAT 7 form. If your company no longer satisfies the requirements for mandatory VAT registration

 For example, by dropping below the VAT deregistration threshold or stopping to operate entirely, this form is crucial. You can either download the VAT 7 form in PDF format or fill it out online using your HMRC account. HMRC will examine your application before approving the cancellation after you formally notify them of your desire to deregister by submitting the VAT 7 form. Important details about your company, such as your VAT registration number, the cause for deregistration, and the date your taxable shipments terminated, must be included on the VAT 7 form.

Additionally, you will have to report the value of any stock or assets you own at the time of deregistration since, if their combined value surpasses a certain threshold, you might have to account for VAT on them. After the application is completed, HMRC usually processes it in a few weeks and sends a confirmation letter, formally terminating your VAT responsibilities as of the specified date.

What Happens After You Cancel Your VAT Registration?

After canceling your VAT registration, HMRC will send you a confirmation letter or email. This will confirm the effective date of communication cancellation. You should stop charging VAT from that date and update your challan and pricing accordingly. If you have a VAT challan or stock where you have retrieved VAT, HMRC, you may need an account for VAT on assets if their total value is more than £ 1,000. You will also have to submit a final VAT return covering the duration till the date of cancellation. 

Once your final VAT returns are deposited and any outstanding VAT is paid, your VAT obligations are officially abolished. However, you should keep all VAT records for at least six years in case of requesting HMRC later. You will need to re-register for VAT if you ever choose to trade above the VAT limit. Following reorganisation, you should keep a close eye on your turnover to prevent penalties for not registering if businesses are required to do so.

Can You Re-register for VAT After Cancelling It?

Yes, you can cancel your VAT registration and then re-register. You must apply for VAT registration if your company’s turnover rises once more and surpasses the £90,000 (2025) VAT registration level.

You can re-register for VAT by:

• using your HMRC VAT services to submit an online application.
• If re-registration occurs near the cancellation date, use your previous VAT number.
• Completing a fresh registration form if your company has changed.

How to register for VAT after deregistration?

1. Go to the VAT registration page of HMRC.
2. Fill out the VAT registration form online.
3. Give the most recent firm turnover statistics.
4. Await the VAT certificate and approval from HMRC.

You might have to reapply if it has been more than two years since you deregistered from VAT.HMRC might, however, let you use your previous number if it’s within a short time.

Conclusion

For many firms in the UK, canceling VAT registration is an essential step. Applying to cancel VAT registration online or by using the VAT 7 form is simple if you follow the correct procedures, regardless of whether your turnover falls below the VAT deregistration level or your company ceases. Always confirm that you fulfill the requirements HMRC has for canceling a VAT registration. If necessary, download the appropriate VAT deregistration form in PDF format. Knowing why you would deregister for VAT helps you steer clear of expensive blunders.

Keep your VAT data secure after deregistration, and be mindful of VAT on assets. After deregistration, you can simply re-register for VAT if your company expands.Effective VAT management shields your company against fines and paves the way for future prosperity.

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