VATDREG04050 - Eligibility or requirement to deregister: introduction

The conditions under which a person may cancel their VAT registration are set out in the individual schedules of the VAT Act 1994. These include both compulsory and voluntary deregistration provisions.

You must consider the specific schedule under which the business is registered, but the following general rules apply to all cases concerning deregistration:

• A person must notify HMRC within 30 days of ceasing to make taxable supplies under the schedule they were registered. HMRC must be satisfied that the person is no longer eligible to be registered.
• In practice, HMRC will cancel the registration with effect from the date the person ceased to be registerable under any schedule—typically the date the business stopped making supplies (i.e. ceased trading). In some cases, a later date may be agreed with the person. This becomes the Effective Date of Cancellation (EDC) – see VATDEREG14000.  
• HMRC cannot cancel a registration if the person remains liable under another schedule. In such cases, the registration continues seamlessly under the appropriate schedule.
• HMRC may compulsorily cancel a registration with effect from the original registration date, effectively treating it as if the registration never occurred.

Circumstances Requiring Cancellation
A person must cancel their VAT registration if they:

• No longer make taxable supplies (e.g. the business has ceased trading)
• Transfer their entire business as a going concern
• Change legal entity
• Join a VAT group – see section 2.5 of VAT Notice 700/11
• Join the Agricultural Flat Rate Scheme – see section 2.6 of VAT Notice 700/11

Voluntary Cancellation
Under Schedule 1, Schedule 9ZA Part 8, and Schedule 9ZC, a person may be entitled to register even if not liable. Such persons may request cancellation of their registration at any time—this is known as voluntary deregistration. If HMRC is satisfied that the conditions for voluntary deregistration are met, the EDC will be the date the request was made or a later agreed date. It cannot be retrospective.
Please note: A person who voluntarily deregisters may need to account for deemed supplies at the EDC – see VAT notice 700/11.

Appeals
Under Section 83(1)(a) of the VAT Act 1994, a person has the right to appeal in relation to most registration and deregistration decisions. Appeals may be made against:

• Refusal to deregister on the grounds that the person is no longer registerable
• Refusal to deregister where the person is no longer liable (e.g. under Schedule 1)
• Compulsory deregistration
• The effective date of cancellation