VATDREG16050 - Stocks and assets on hand: general provisions
The legal provisions relating to goods and capital assets on hand at the time of deregistration are contained in paragraph 8 of Schedule 4 to the VAT Act. Under this provision, a person is deemed to have supplied the goods that form part of their business assets immediately before ceasing to be a taxable person, i.e. the day before their effective date of cancellation.
As a result, VAT is normally payable on those goods and assets, which remain on hand at the time of deregistration, unless any reliefs are available. Further details on these reliefs and guidance on handling stocks and assets can be found in VATSC - VAT Supply and Consideration.
You should also consider whether any assets on hand fall within The Capital Goods Scheme. General guidance on the scheme is available in VATLP - VAT Land and Property and specific instructions on how to treat such assets at deregistration are provided in Capital Goods Scheme (VAT Notice 706/2).
Note: Traders cancelling their registration to join the Agricultural Flat Rate Scheme (VAT Notice 700/46) are not required to account for VAT on stocks and assets remaining on hand at the time of deregistration.