Deregistration

If you have ceased trading you must apply to deregister (using form VAT7 – http://search2.hmrc.gov.uk/kbroker/hmrc/forms/viewform.jsp?formId=999). If your sales have fallen below the deregistration limit (£75,000 from 1 April 2012), then you can apply to be deregistered but you don’t have to. If you change the legal status of your business, e.g. from a sole trader to a company or partnership, you will need to contact HMRC as you may wish to continue with the same registration number rather than cancel and re-register.

When you deregister, you may have to pay VAT on any goods you have on hand when you deregister – though you will not normally be charged if the VAT due is under £1,000 – see BusinessLink pages on Cancelling your VAT Registration.

If you don’t deregister, then HMRC will continue to send you VAT bills, based on estimates. If you do get bills based on estimates from after your business ceased operating, you will need to submit nil returns (if applicable) to reduce the bill to the correct amount (possibly zero).