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Limited company FAQs for contractors, business owners and entrepreneurs
As a limited company director or small unincorporated business, you may have had to register for VAT because your annual turnover hit or was expecting to hit the mandatory VAT registration threshold of £85,000. Or you could have made a voluntary registration for VAT with a lower level of business income. But can you and how do you de-register your business if your income level is expected to be lower than £83,000 (the de-registration limit) or you’re closing your business?
There is a list of common criteria that need to be in place before you embark on the de-registration process:
You must be sure that you meet the criteria. VAT de-registration confirmation from HMRC usually takes around 3 weeks to come through. You can’t request a retrospective de-registration.
If you have an accountant like PayStream acting as your authorised agent with HMRC they can carry out the de-registration process on behalf of your business.
Alternatively, you can go online and de-register through your VAT online account or using the HMRC site: https://www.gov.uk/register-for-vat/cancel-your-registration. You can use the VAT7 form online or in paper form if you prefer.
The lower figure is set by HMRC so that businesses do not keep coming in and out of VAT registration if their turnover only fluctuates by small amounts.
Your last VAT return must include all debits and credits up to the date of registration, so any unpaid invoices or purchases made in that period need to be shown. We suggest that you take professional advice if you’re unclear as to how to identify and record these transactions.
No. Zero rate goods are still ‘taxable’ but at 0% so you need to continue your registration.
No. You’ll need to re-register your company again and obtain a new number.
Assuming your business does not need to be registered because of its low turnover, by de-registering it can save on having to account for VAT on its supplies and the costs of activities such as making VAT returns. Your company would not be able to deduct VAT on its business expenses. There may also be a potential less of credibility as a substantial trading entity if you don’t charge VAT.
Although de-registering for VAT is relatively straightforward, there can be timing and procedural pitfalls for the unwary. PayStream therefore always advise that you speak to an experienced accountant before making any changes to ensure you to make the right decision. For those using our accountancy service, they should speak with a member of their dedicated accounts team.