VATDREG10000 - Deregistration allowed
This guidance concerns cancellation of registration under Schedule 1 to the VAT Act 1994. Although similar provisions apply under other registration schedules, there are important differences. You should therefore always refer to the relevant legislation and associated guidance. Further guidance can be found at VATDREG04000.
Paragraph 13 of Schedule 1 contains the provisions relating to cancellation of registration. These are commonly referred to as voluntary deregistration under paragraph 13(1) and compulsory deregistration under paragraph 13(2).
Paragraph 13(1) provides that:
"Where a registered person satisfies the Commissioners that he is not liable to be registered under this Schedule, they shall, if he so requests, cancel his registration with effect from the day on which the request is made or from such later date as may be agreed between them and him."
This is subject to paragraph 13(4), which prevents cancellation where the person is liable to be registered under another registration schedule. Accordingly, where HMRC is satisfied that a person is no longer liable to be registered under Schedule 1, and is not otherwise required to be registered under the VAT Act, cancellation under paragraph 13(1) can take effect only from the date of the request or from a later date agreed with the person. There is no provision allowing HMRC to cancel registration from an earlier date under paragraph 13(1).
Paragraph 13(2) provides that:
"Where the Commissioners are satisfied that a registered person has ceased to be registrable, they may cancel his registration with effect from the day on which he so ceased or from such later date as may be agreed between them and him."
This is subject to paragraph 13(5), which provides that cancellation may take place only if, at the relevant time, the person is neither required nor entitled to be registered under the VAT Act. In determining whether a person is entitled to be registered for the purposes of paragraph 13(5), paragraph 13(6) requires paragraph 9 (and the equivalent provisions in other registration schedules) to be read as though the words 'who is not a registered person' were omitted. A person does not cease to be entitled to be registered merely because they are already registered.
As a result, retrospective deregistration under paragraph 13(2) is not available where the person remained entitled to registration at the time the cancellation would otherwise have taken effect.
This interpretation was confirmed in Mundy t/a Hayley's Hair Design [2015] UKFTT 321 (TC) and Inspired By Service Ltd [2016] UKFTT 812 (TC); [2017] TC05537.