How to deregister for VAT

Deregistering for VAT means cancelling your VAT registration with HMRC so that you stop charging VAT and stop sending VAT returns. HMRC’s own wording is cancelling your registration, and the two terms mean the same thing.

It is not the same as closing the business, and it does not end your other tax duties. You must still keep your VAT records for 6 years, and you will have to send a final VAT return. If you are not yet registered and want the opposite, see our guide to the VAT registration threshold.

You must cancel if you are no longer eligible to be VAT registered, and you must do it within 30 days or you might be charged a penalty. GOV.UK gives stopping trading or stopping VAT taxable supplies, and joining a VAT group, as examples.

HMRC’s VAT Notice 700/11 adds that a registration is also cancelled when you sell your business, when your legal status changes and when you join the Agricultural Flat Rate Scheme. Cancellation in these cases is compulsory and takes effect from the date the reason arose, for example the date you stopped making taxable supplies.

Yes, if your turnover has fallen low enough. As of October 2026 you can ask HMRC to cancel if you can satisfy it that your taxable turnover over the next 12 months will not exceed £88,000, the VAT registration cancellation limit.

That limit sits £2,000 below the £90,000 registration threshold, so the two figures are not the same. HMRC works on a VAT-exclusive basis, and you need to explain why turnover will fall, for example because you have reduced your opening hours, lost contracts or changed how you trade, and what you expect it to be.

• HMRC may agree if it is satisfied you will stop charging VAT, or, if you are a retailer, that you will reduce your prices by the VAT element.
• HMRC will not agree if turnover is falling because you plan to stop trading, or suspend taxable supplies, for 30 days or more in the next 12 months.
• If your turnover is above the limit but your sales are wholly or mainly zero-rated, you can write to HMRC asking to be exempt from registration. If you also make standard-rated sales, you can cancel on this ground only if your input tax normally exceeds your output tax.

A business based outside the UK cannot use the turnover route. A non-established taxable person can cancel only if it has completely stopped making taxable supplies in the UK.

Compulsory cancellation happens because you are no longer eligible, while voluntary cancellation is a request you make that HMRC has to accept. The table sets out the main differences.

You can usually cancel online, signing in to your VAT online account, and you can ask an agent to do it for you. The online service is available if you have stopped trading and are not in a VAT group, if your taxable turnover is below £88,000, if you have stopped making VAT taxable supplies, or if you are applying for an exemption because most of what you sell is zero-rated.

Use the paper form VAT7 instead if:

• Your legal status has changed and you want a new VAT registration number
• You have sold your business and the new owner is not keeping the VAT number
• Your VAT group is closing, in which case you also complete a VAT50-51 form and send both together
• Your business stopped trading after liquidation

If a buyer or new entity is keeping the VAT number you transfer it rather than cancelling it, using form VAT68. GOV.UK sets out the transfer steps in the same guide.

HMRC usually contacts you to confirm within 40 working days, although it may take longer in busy periods. If you have heard nothing after 40 working days, contact the VAT Registration Service, and do not do so earlier because it might delay processing.

The confirmation gives your official cancellation date and arrives in your VAT online account or by post. You must stop charging VAT from that date and keep the confirmation with your other VAT records.

The final VAT return covers the period up to and including your cancellation date, and it must be sent by the due date shown in your VAT account or in HMRC’s letter. In some cases the period can be as short as a day.

You must also account for VAT on stock and other assets you hold on that date if you reclaimed, or could have reclaimed, VAT when you bought them and the total VAT due on them is more than £1,000. HMRC calls this a deemed supply.

• Tangible goods such as unsold stock, plant, furniture, commercial vehicles and computers are included.
• Intangible assets such as patents, copyrights and goodwill are not.
• Items you bought without claiming VAT, such as goods from unregistered sellers, do not need VAT accounted for.
• If all your assets are standard-rated at 20%, no VAT is due when their total VAT-inclusive value is £6,000 or less. Above that, VAT is due on all of them.

Do not delay the return until all purchase invoices arrive. You can still reclaim VAT on invoices that turn up later. If you pay VAT by payments on account, keep making the instalments until HMRC confirms cancellation. When the return shows an amount to pay, how to pay a VAT bill covers the payment methods.

Not necessarily, because the effects run both ways. You stop charging VAT and filing returns, but you also stop reclaiming VAT on what you buy, and a customer who is VAT registered will not be able to reclaim VAT from you. Ask an accountant to check how that affects your prices and customers before you apply.

• You must tell HMRC promptly if you become liable to register again later, and there are penalties for failing to register at the proper time.
• HMRC can re-register you automatically if it decides you should not have cancelled, and you account for VAT due in the meantime.
• If HMRC finds you gave false or misleading information to cancel, it will take action to re-register you.

If a final VAT bill is bigger than expected and you cannot pay it on time, speak to HMRC early about HMRC Time to Pay.

Cancelling a VAT registration is a matter between you and HMRC, and it is not something Capzy arranges. We are a credit broker, not a lender, and we are paid by the lender. We do not give tax, legal or accounting advice, so ask your accountant before you cancel.

If the final return leaves a bill that strains cash flow, some businesses use VAT loans, which cost interest and fees. You can check your funding options with a soft search that does not affect your credit score. Offers are subject to status and lender criteria. While you remain registered you must follow the Making Tax Digital rules, and once you cancel you no longer need digital records in compatible software, although you must still keep your VAT records. A company in financial difficulty should take advice early from a licensed insolvency practitioner.