There are two valid reasons to cancel your VAT registration:
- you have ceased trading and have no intention of making future sales
- your sales in the next 12 months are expected to be less than £83,000
If your turnover for the last 12 months has been above the VAT registration threshold of £85,000, you will be required to submit VAT returns for periods starting on or after 1 April 2019 using MTD compatible software, until and unless you cancel your VAT registration.
Where you are winding down your business, it may make sense to cancel your VAT registration sooner rather than later, to avoid having to buy new software to comply with MTD.
You can only ask HMRC to cancel your VAT number from a future date. From that date you must not charge VAT on your sales and you can’t reclaim VAT on purchases.
Don’t delay the deregistration date because you are waiting for some purchase invoices to arrive. Any VAT paid on costs relating to the period while your business was VAT registered can be reclaimed later on form VAT427. We can help you with that.