VATDREG15000 - Re-registration after cancellation
If a person has been deregistered
in error and the application has been processed, there are two possible
actions:
• Reinstate the original VAT Registration Number (VRN) – provided we have the
person’s agreement
• Re-register the person – if they are liable to be registered or request to be
registered
Reinstatement
The VAT Act 1994 does not explicitly provide for reinstatement once a person
has been deregistered. However, as an administrative easement, HMRC may
reinstate a person’s VRN with their consent. HMRC cannot compel reinstatement.
Reinstatement has the effect of
treating the registration as continuous, as if the person had never been
deregistered. Standard practice allows reinstatement within six months of the
effective date of cancellation. In exceptional cases, a shorter or longer
period may be considered, depending on the specific circumstances. There is no
right of appeal against a decision not to reinstate.
A person who was deregistered in
error but does not have a liability to register may still request
reinstatement, provided they have an entitlement to be registered.
Re-registration – Schedule 1
If reinstatement is not agreed or deemed inappropriate, the person must be
re-registered under the normal rules if the person is liable to be registered.
Under Schedule 1 of the VAT Act
1994, this will depend on the value of their supplies using:
• The backward look test – see VATREG18100
• The forward look test – see VATREG18200
Key Considerations:
• VATREG18150:
When determining liability to register, do not include turnover from the
previous registration period unless the person misled HMRC or withheld
information at the time of deregistration
• VATREG25100:
If liability is established, the earliest re-registration date is the first day
of the second month following the date liability arose. This will create a gap
between the old and new registration where the customer was not liable to
account for VAT.
• Under the forward look, the effective date of registration may be immediately
after deregistration if there is evidence available at that time the taxable
turnover will exceed the threshold in the next 30 days
Example:
On 22 April, a person deregistered but had misled the department when stating
their liability to register had ceased. As a result, we can include their
taxable turnover in their previous period of registration when calculating
their liability to be registered.
If we have their agreement, the original VAT number can be immediately
reinstated.
If we do not have agreement to reinstate, we must re-register the person
subject to the normal rules.
Timeline Event Date
Registration threshold exceeded 22 April
Trader becomes liable to register 30 April
Effective date of registration (EDR) 1 June
Re-registration - Schedule 1A and 3A
Under Schedules 1A and 3A, the effective date of registration is the date
liability arose, allowing immediate re-registration from the date following the
effective date of cancellation of their previous registration.