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HMRC internal manual

VAT Small and Medium Enterprises Assurance Manual

The audit process: estimation for completion of VAT return: deregistration action

Traders in the course of deregistering are subjected to the same sift routines as other traders, but additional information may be provided by the deregistration section in the VRU. If the trader no longer fulfils the requirements of obligatory registration and the voluntary registration and intending trader options do not apply, you should consider the need to deregister. If appropriate, take up a completed VAT 7, or failing that a letter signed by the trader, for the attention of the deregistration unit. If turnover has dropped or trading ceased, and assets or parts of the business have been disposed of, you may need to issue references or conduct further enquiries. Where it is found during any contact that a trader has ceased to make taxable supplies the officer should be guided by V1-28 Registration 

Section 15.

In arriving at the amount of tax due on the final return the officer should establish purchases en route to the trader, input tax which has not yet been invoiced, deliveries outward not yet invoiced and other supplies for which the tax point has not occurred (for example, goods on sale or return, builders’ retentions). A value for stocks and assets needs to be ascertained.

To minimise the need for later adjustments the officer should emphasise to the trader the importance of including, in the final return, all relevant inputs and outputs. The trader is also to be requested to render the final return and any tax due promptly.

To assist the deregistration officer in selecting final returns for verification (V1-28 paragraph 15.49 onwards), the officer should record on the report form:

  • the figures ascertained and an estimate of the tax likely to be payable on the final return;
  • whether it is considered necessary that the final return should be verified; and
  • any adjustments outstanding in respect of earlier periods.