VAT Deregistration advice

[Greedo]

Due to personal reasons, I have not been in contract for a couple of years.

During this time, I have paid myself a reduced salary as well as ensuring all paperwork and accounts have been completed and filed when due.

This morning, I received a letter from HMRC regrding possible cancellation of my VAT registration due to not making any recent taxable services and that I have 21 days to respond in writing with firm evidence indicating a clear intent to make taxable services otherwise my registration would be cancelled. They do state, however, that I can re-apply for registration in the future as long as I can provide evidence of an intention to make taxable services.

The reality is, it is un-likely that I will be able to provide such evidence so de-registration is inevitable in 21 days time - HMRC's approach is understandable and I don't have an issue with this.

However, I have a couple of questions regarding the process (the HMRC deregistration team do not provide a telephone helpline):

1) Will the deregistration process, which from HMRC's letter, seems straightforward in that after 21 days they will send me a formal letter of deregistration require any additional input from me?

2) Will deregistration make a future application for registration harder or would the submission of a signed contract as evidence of intent to make taxable services suffice?

[malvolio]

Not sure on all the underlying legalities, but VAT registration is strictly dependent on turnover. HMRC won't penalise you for not having any and then getting some and coming back intothe fold.

Just to be safe, though, perhaps you should de-register yourself rather than let them do it to you?

[Greedo]

I have decided to follow the automatic deregistration process rather than apply for deregistration myself.

However, a comment in a recent article, When do I need to deregister for VAT?, raises a concern for me.

The article states that "many contractors use the Flat Rate Vat Scheme and if you deregister from FRVS you must wait a full 12 months before re-applying".

As HMRC are automatically deregistering my Ltd, would this 12 month wait also apply in my circumstances?

[malvolio]

I have decided to follow the automatic deregistration process rather than apply for deregistration myself.

However, a comment in a recent article, When do I need to deregister for VAT?, raises a concern for me.

The article states that "many contractors use the Flat Rate Vat Scheme and if you deregister from FRVS you must wait a full 12 months before re-applying".

As HMRC are automatically deregistering my Ltd, would this 12 month wait also apply in my circumstances?

Yes. Can you work out why? Hint: it relates to my previous suggestion.

[DcoC]

This happened to me (same circumstances - illness kept me out for 2 years)

I spoke to the guy who was deregistering my company. It seems it's an automated process, so there's very little you can do unless you are in the process of invoicing clients

However, he mentioned I would be able to re-register for the VAT scheme and it would take "only a few days to process".

[TheFaQQer]

However, he mentioned I would be able to re-register for the VAT scheme and it would take "only a few days to process".

You can re-register for VAT, but not FRS.

[Greedo]

Thank you.

Although I can't say I understand the logic in allowing you to re-register for VAT but not the FRS.

[malvolio]

Thank you.

Although I can't say I understand the logic in allowing you to re-register for VAT but not the FRS.

Because FRS is something of a favour to make ilfe simple. It was also intended for people like pubs and shops that have lots of fiddly little transactions rather than our one invoice a week; keeping it simple meanas less rissk of people making mistakes. But since it loses HMRC money, it's a once a year deal.