VATDREG08400 - Cancellation in particular cases: insolvency, death or other incapacity
Guidance on death, insolvency, and incapacity can be found at VATREG42000
The insolvency regime includes
business rescue procedures such as Administration and Voluntary Arrangement,
where the expectation is that the business will continue trading in the medium
to longer term.
In contrast, during bankruptcy or
liquidation, the business typically ceases trading upon the appointment of the
insolvency practitioner (IP). However, the IP will generally continue to make
taxable supplies through the sale of stocks and assets.
Important: Regardless of the type
of insolvency, VAT registration must not be cancelled unless the business has
ceased all taxable activities, including both trading and the realisation of
stock or shares.
If the business ceases as part of
the insolvency process, the appointed insolvency practitioner or Official
Receiver is responsible for submitting the application to cancel the VAT
registration, where appropriate. They are also accountable for VAT on any
supplies made after their appointment.