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HMRC internal manual

VAT Deregistration

Values of supplies and acquisitions: calculating values of supplies or acquisitions

When considering whether a person will be trading below the deregistration threshold you will need to consider the tax exclusive (net) values.

If this net value is below the deregistration threshold, we then need to be reasonably satisfied that:

  • the person will not include some or all of the value of the VAT in the gross value of future supplies, and
  • in the case of a retailer, they will reduce their prices.

If the person does not intend to reduce their gross prices, they will have to provide further evidence to substantiate reduced turnover before we can allow deregistration. This is because, without such a reduction, their future turnover may exceed the deregistration threshold.

If the tax-exclusive turnover exceeds the deregistration threshold, we may still allow deregistration, provided that the person can satisfy us that the turnover will drop as a result of other factors. Examples of this are where a trader intends to reduce their opening hours or if they have lost a large contract.

When calculating the tax exclusive values of a person registered for less than 12 months, we need to consider projecting the figures to a full year.