If you are no longer eligible to be VAT registered, you will need to deregister for VAT. There are a number of scenarios whereby this could apply. For example, perhaps you have joined a VAT group? Or, maybe you have stopped making or trading supplies that are VAT taxable? No matter what applies, read on for more information regarding deregistering from VAT.
Who can apply for VAT deregistration?
Can I deregister for VAT? As mentioned, there are many different circumstances whereby you may need to deregister from VAT. You will need to deregister from VAT if your VAT taxable turnover falls below the VAT deregistration threshold, which is £81,000. There are also the circumstances mentioned in the introduction, i.e. you have stopped making or trading VAT taxable supplies, or you have joined a VAT group.
How does VAT deregistration work?
If you are interested in HMRC VAT deregistration, you need to cancel within 30 days of being ineligible, otherwise, you may be subject to a fine. To do this, there is an application form that you need to fill out and submit. This is the VAT7 form. If you are unsure regarding how to fill this out, an experienced accountant can do it on your behalf. VAT deregistration online is available, and you are advised to work with a chartered account when it comes to your final VAT return after deregistration.
The benefits of VAT deregistration
There are a lot of companies that decide to register for VAT on a voluntary basis, i.e. before they reach the threshold. They do this for several reasons, i.e. they may want to appear larger than they are, or they may want to reclaim VAT. However, if you have registered voluntarily, there are a few disadvantages, and if you are experiencing these, it may be time to consider deregistering.
For example, you may feel like you are drowning in a sea of paperwork. You will have to complete a quarterly VAT return in most cases, which means added demands placed on your reporting and bookkeeping processes. You may find that you spend more time bogged down with paperwork as opposed to concentrating on the areas of your business that really makes you money.
You may also find that you save a considerable amount of money by reregistering from VAT. This is because a VAT registered company is obligated to charge VAT on all applicable services and goods. If the VAT you charge, which is your output tax, exceeds the VAT you pay, which is your input tax, you will need to pay the difference to HMRC, and this is when VAT becomes too expensive for a lot of businesses.
Hopefully, you now have a better understanding regarding deregistering for VAT. If you are still unsure as to whether you should deregister VAT, or you need some assistance with doing so, a reputable chartered accountancy in Kent like those here at Dyer will be able to assist. If you find that you still need to pay VAT, we could recommend a more affordable alternative, such as the VAT Annual Accounting Scheme – which may have benefits you hadn’t considered. If VAT deregistration is on your mind, why not call us today to see if we could help.