Deregistering for VAT

VAT thresholds are the subject of much speculation as the Government is concerned that many business owners are deliberately choosing to remain below the VAT registration threshold.

Whilst limiting your turnover in this way might seem counter-intuitive – surely you want your business to get as big as possible, it can make sense if you’re seeking to make a comfortable living rather than get rich.

If the turnover of your business is predicted to fall below £83,000 over the next year, it can voluntarily deregister for VAT.

You would also need to deregister from paying VAT if your business ceased to trade.

Voluntary deregistration

Your business can deregister if it expects taxable sales in the next 12 months to be less than the deregistration threshold, which is currently £83,000. A voluntary deregistration from VAT can take effect from a current or future date.

If you fail to specify a date, the deregistration will take effect from the date HMRC receives the application to deregister, or a later date as agreed with HMRC.

You can’t backdate deregistration, even if you’ve made a mistake in registering for VAT, or you could have applied to deregister earlier but didn’t for whatever reason.

Compulsory deregistration

If your business has ceased to trade and will not make future taxable sales, it must deregister from VAT with effect from the final day of trading.

There is scope though to extend this date and thereby capture some final purchase invoices for the purposes of reclaiming input VAT. It’s almost certain that there would be professional fees to pay, which arrive after a business makes its last sale.

If you’d like to discuss this further with us then contact us via the number at the top of the page.


This article is for general guidance only. It provides an outline, and may not include points which are important to your situation. You should not depend on this blog without taking advice based on the full facts of your case. The information given was correct at the time of publication.

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