VAT7: cancelling your VAT registration

Who needs it

• Businesses whose legal status has changed and that want a new VAT number.
• Sellers of a business where the new owner isn't keeping the VAT number.
• VAT groups that are disbanding, which also send VAT50-51.
• Businesses that stopped trading after liquidation.
• Everyone else cancelling (stopped trading outside a group, turnover below the threshold, no longer making taxable supplies, or applying for exemption) can use the online service.

What you need before you start

• Your VAT registration number and HMRC sign-in details, to cancel online.
• The date the reason for cancelling took effect, such as the date you stopped trading.
• For VAT7 by post: the form completed in full before you print it (it can't be part-saved), plus any other forms your case needs.

How to file VAT7

1. 1Work out whether you must cancel (you're no longer eligible) or want to (taxable turnover below £88,000).
2. 2Check whether you should transfer the registration instead, for example when selling a business and the buyer keeps the number.
3. 3Cancel online if your case allows it. Otherwise complete VAT7 in full, print it and post it, with any other forms, to the address on the form.
4. 4Wait for confirmation, usually within 40 working days, in your VAT online account or by post.
5. 5Stop charging VAT from the cancellation date and send a final VAT Return for the period up to and including it.

When you must cancel, and when you can

You must cancel if you're no longer eligible to be registered, for example because you stop trading, stop making VAT taxable supplies or join a VAT group. You have 30 days from becoming ineligible, or you might be charged a penalty.

You can ask HMRC to cancel if your taxable turnover falls below £88,000. That doesn't apply to a business based outside the UK that supplies goods or services to the UK, or expects to within 30 days.

You don't cancel if you're changing legal status or selling the business and keeping the same number (transfer it with VAT68), or if one company in a VAT group is closing or you're joining or creating a group (VAT50-51).

Online or VAT7 by post

HMRC's cancellation page lists the online cases: you've stopped trading and aren't in a VAT group, your turnover is below the deregistration threshold, you've stopped making taxable supplies, or you're applying for an exemption because most of your sales are zero-rated.

VAT7 by post is for a change of legal status where you want a new number, a sale where the new owner isn't keeping the number, a VAT group disbanding (with VAT50-51), or a business that stopped trading after liquidation.

After you cancel

HMRC usually confirms within 40 working days, though it can take longer at busy times. The cancellation date is either when the reason took effect or the date you asked for. From then, stop charging VAT.

Send a final VAT Return for the period up to and including the cancellation date. If HMRC later finds you shouldn't have cancelled, it re-registers you and you account for VAT owed in the meantime.

Common mistakes

• Missing the 30-day limit after you stop being eligible. HMRC may charge a penalty.
• Cancelling when the number should transfer. If you change legal status or sell the business and the number stays with it, transfer the registration instead.
• Delaying the final return while waiting for supplier invoices. HMRC says file on time; you can still reclaim VAT when the invoices arrive.
• Forgetting stock and assets. Your final return accounts for VAT on stock and assets you reclaimed VAT on, if the total VAT due is above the limit on HMRC's page.
• Throwing records away. HMRC asks you to keep VAT records for 6 years.