7. Post VAT registration cancellation

How to claim post VAT registration cancellation input and output tax.

7.1 Input tax

Post VAT registration cancellation input tax may be claimed on form VAT426: insolvent traders claim for input tax after cancellation of VAT registration.

This form is to be used only by office holders referred to in section 7.2.

7.2 Who can use form VAT426

The form is available for use by:

  • trustees in bankruptcy
  • trustees in sequestration (in Scotland)
  • official receivers
  • liquidators
  • administrative receivers

7.3 Who cannot use form VAT426

Form VAT426 may not be used by solvent traders to cancel their VAT registration, office holders in business rescue procedures and other incapacitated traders.

These categories include:

  • supervisors in voluntary arrangements
  • administrators in company administrations
  • trustees appointed under a trust deed (in Scotland)
  • Law of Property Act receivers
  • receivers appointed in a partnership dispute
  • receivers appointed by a court
  • receivers appointed under the Agricultural Credits Act 1928
  • office holders appointed for a scheme of arrangement
  • administrators appointed for a deceased person’s administration order
  • liquidators in a members’ voluntary liquidation

7.4 What you can and cannot claim on the form VAT426

You’ll find the basic rules about input tax in VAT guide (Notice 700).

You can claim input tax:

  • on services supplied after cancellation of VAT registration but relating to business carried on before cancellation of VAT registration
  • on goods and services supplied and invoiced before cancellation of VAT registration which has not already been claimed on a VAT Return
  • on the services of agents (for example, solicitors or estate agents)
  • on realisation fees
  • on bad debt relief (read section 10)

You cannot claim input tax:

  • relating to pre-insolvency tax periods
  • on charges made by, for example, solicitors, estate agents and stockbrokers relating to exempt supplies
  • on pro forma invoices which cannot be claimed as input tax correctly
  • relating to a petitioning creditor’s costs

These general rules also apply:

  • you’re entitled to claim only tax which relates to goods and services used in the making of taxable supplies (you should calculate exempt input tax in accordance with the guidance given in Partial exemption (Notice 706))
  • you can only claim relief from VAT on those services which, though supplied after the registration was cancelled, relate to taxable activities
  • there’s no relief from VAT on goods supplied to you after the date of VAT registration cancellation or on services which are not attributable to taxable supplies
  • you must keep all invoices supporting your claim with the relevant books and records in case your claim is selected for verification

7.5 Where to send completed form VAT426 claims

You should send your completed form VAT426 claims to:

Debt Management — EIS NCL
HM Revenue and Customs
BX9 1SR

You can contact the VAT426 Team by telephone: 0300 322 9209.

Opening times:

Monday to Friday: 8am to 5pm

Provide supporting invoices for amounts claimed of £20,000 or over. Claims for amounts of £20,000 and over will be paid by Bacs (Bankers Automated Clearing System) so provide Bacs details for these claims.

You can expect to receive a payable order within 30 working days from the date HMRC get your completed claim at this address, subject to the verification of your claim.

7.6 Verification of claims

We will select some claims for verification. This may be carried out by the local VAT office that will make arrangements to visit you within 30 working days from the date the VAT426 processing team receives your claim.

Most verification visits will be made after we have authorised your repayment claim. But in some instances, we may decide to withhold repayment until we have completed our enquiries.

If we disallow any part of your claim, you may be held liable to bear the cost of any VAT we’ve disallowed.

7.7 Form VAT427 (claim for input tax made post VAT registration cancellation relating to goods and services supplied prior to VAT registration cancellation)

The form VAT427 should be used in the following circumstances:

  • members voluntary liquidations
  • administrations
  • Scottish trust deeds
  • deeds or schemes of arrangement
  • voluntary arrangements

The completed form VAT427 should be sent to:

HMRC Payments VAT/CT61
HM Revenue and Customs
BX9 1XD

The criteria for reclaiming input tax on form VAT427 is the same as form VAT426 as outlined at section 7.4.

7.8 Output tax

VAT on taxable stocks and assets remaining at the date of insolvency must be accounted for on post-appointment returns.

VAT must not be charged post VAT registration cancellation, since a cancelled VAT registered business cannot legally issue a VAT invoice.

The VAT registration will therefore be kept open until all trading has ceased and asset realisation is complete (though insolvent businesses that continue to trade may cancel their VAT registration voluntarily on turnover grounds if they can satisfy the conditions in section 3.2 of Cancelling your VAT registration (Notice 700/11)).

Any cases of difficulty, for example, difficulty in selling a property where there is an option to tax, may be discussed with the appropriate HMRC insolvency team using the contact details in section 1.4.

Read section 17.3 for details of the method Law of Property Act receivers should use to account for output tax.

7.9 Form VAT 833

The form VAT 833 (goods sold in satisfaction of a debt) must not be used to account for output tax post VAT registration cancellation for the reason outlined in section 7.8. Form VAT 833 may still be completed for use in these processes:

  • deeds and schemes of arrangements
  • County Court administration orders
  • Scottish trust deeds
  • deceased persons’ administration orders
  • management of property by Law of Property Act receivers

In all cases you should send form VAT 833 to:

HMRC Payments VAT/CT61
HM Revenue and Customs
BX9 1XD