How to Cancel VAT Registration in UK

Navigating UK VAT can be complex, especially if your business unfortunately contracts and you have to face decisions about cancelling your VAT registration. Knowing when and how to cancel VAT registration not only keeps you on the right side of HMRC but can also allow you to save costs and simplify your accounting.

In this guide, we’ll walk you through why and when to cancel VAT registration, share step-by-step instructions for the process and provide information about what to expect afterward.

What Does It Mean to Cancel VAT Registration?

To cancel VAT registration means formally removing your business from HMRC’s VAT register. After you cancel your VAT registration, you’ll no longer have to charge VAT on the sales of your goods or services, but you’ll also lose the ability to reclaim VAT on purchases made for your business.

Whether required to deregister or doing so voluntarily, choosing to cancel VAT registration has widespread implications on your business’s pricing and finances.

Why You Might Need to Cancel VAT Registration

There are two broad reasons why a business might want or be required to cancel VAT registration in the UK, and they fit into two neat categories – compulsory deregistration and voluntary deregistration.

Compulsory Deregistration

You must cancel VAT registration within 30 days if:

You stop trading or cease making VAT-taxable supplies
Your business joins a VAT group
Your entire company is sold
Your legal status changes (for example, from a limited company to a sole trader)
Your taxable turnover is expected to remain below the deregistration threshold (£88,000 as of July 2025) for the next 12 months

Failing to cancel VAT registration within the 30-day window may result in HMRC penalties.

Voluntary Deregistration

You can voluntarily cancel your VAT registration if your turnover falls below £88,000, provided you don’t expect it to rise above this threshold in the coming year. Many businesses elect to cancel VAT registration voluntarily to reduce paperwork and tighten control over pricing.

Are You Allowed to Cancel VAT Registration?

Before proceeding with VAT registration cancellation though, make sure your business meets the eligibility requirements to cancel VAT registration.

Generally, you can deregister if:

If your business becomes ineligible for VAT registration, i.e., eligible for deregistration, you must cancel your VAT registration within 30 days to avoid administrative penalties.

How to Cancel VAT Registration: Step-by-Step Process

Cancelling your VAT registration is a structured process, either done online via the HMRC portal or by post using the VAT7 form.

Step 1: Gather Information & Documentation

Before starting the process to cancel VAT registration, you need to have the following on hand:

Your VAT registration number
Your business/trading name
Your main trading address
Your contact phone number and email
Your reason for deregistration and supporting details
The date you want the VAT registration cancellation to take effect

Step 2: Choose Your Method

Cancelling VAT Registration Online

The quickest way to cancel VAT registration is to log into your VAT account using Government Gateway credentials:

Visit the HMRC online services website and log into your VAT online account
Select the VAT section, then choose “Cancel VAT registration”
Complete the prompts, including the chosen effective date and reasons for deregistration
Submit your request to HMRC

Cancelling VAT Registration by Post

If you’re unable to use the online method (such as for legal entity changes or VAT group modifications), use the VAT7 paper form:

Step 3: Wait for HMRC Confirmation

After you submit your application to cancel VAT registration, HMRC generally takes about three weeks to process your request. You’ll receive official confirmation via your online account (if applied digitally) or by letter (if submitted by mail), confirming the date your VAT registration is canceled.

Step 4: File Your Final VAT Return

You’re required to submit a final VAT return covering the period up to your cancellation date. This should account for all sales and purchases, plus adjustments for assets or stock owned at deregistration.

If you reclaimed VAT on business stock or assets with a total value exceeding £1,000 (excluding VAT), you may need to account for VAT on these items as if you had sold them at market value (known as “self-supply”).

Step 5: Keep VAT Records

After you cancel VAT registration, you’re still required by HMRC to retain all relevant VAT records for at least six years. This is crucial, as HMRC may request to review your old returns, transaction records and correspondence at any time.

What Happens After You Cancel Your VAT Registration?

You must stop charging VAT from the official cancellation date provided by HMRC
Update your invoicing and customer communications to remove VAT references after your registration ends
You’ll no longer file VAT returns unless instructed to do so by HMRC
Any Economic Operators Registration and Identification (EORI) number linked to your business will also be canceled unless you reapply

It’s essential that you keep all VAT records for six years after you cancel VAT registration. These may include invoices, receipts and correspondence with HMRC, and are required if HMRC launches a compliance review.

Implications of Cancelling VAT Registration

There are several implications to canceling your VAT registration. These are:

You can no longer charge VAT on sales or reclaim VAT on expenses
You may have to pay VAT on stock/assets you keep, if the VAT reclaimed on them exceeded £1,000
You must continue to keep your records for six years
HMRC might automatically re-register you if they determine that you should not have canceled VAT registration, and you’ll be liable for backdated VAT during any lapse in registration
Customers may perceive differences in your business’s status; some buyers associate VAT registration with business credibility
If your circumstances change and your annual taxable turnover exceeds the VAT threshold again, you must re-register for VAT immediately

Tips & Best Practices When You Cancel VAT Registration

Always double-check that your turnover is below the threshold before applying to cancel your VAT registration
Notify HMRC promptly, with clear supporting evidence, especially in cases of business closure or group changes
File your final VAT return as soon as possible to avoid penalties or interest charges
If you have business assets on which you reclaimed VAT, consult with a tax professional to ensure proper accounting (“self-supply” tax)
Retain all VAT records meticulously and securely for at least six years
If you plan to continue trading in a smaller capacity or expect fluctuations in turnover, consider the implications and re-registration requirements carefully

Summary: Key Steps to Cancel VAT Registration

Steps	Medium	Remarks
Gather Necessary Details	—	These details include VAT number, trading name, address, contact details and documents that validate your reason to deregister
Apply to HMRC	Online gateway or by VAT7 post	Apply within the 30-day deadline
Await Confirmation	Online account or by post	Confirmation usually provided within 3 weeks
File Final VAT Return	Online or as instructed by HMRC	Account for assets >£1,000
Keep Records	Maintain all VAT files for 6 years	For audit or helpdesk checks

Conclusion

The process to cancel VAT registration is pretty straightforward, but that doesn’t mean you can be careless. Whether you’re scaling down, below the VAT threshold or reorganizing your business, always check that your records are up to date and submit every required form on time.

When in doubt, consult HMRC guidance or a qualified professional, like Sterling & Wells, to ensure full compliance and a smooth transition through the VAT deregistration process. Remember, not deregistering from VAT on time can be detrimental to your business.

By following the steps in this guide, you can successfully cancel VAT registration, simplify your tax obligations and focus your energy on building your business. And remember, if your business grows again in the future, you must re-register for VAT.

This article is only intended as a guide; always consult the latest HMRC guidance or a UK tax professional before making any decision.

FAQs about Cancelling VAT Registration

1. What if I cancel VAT registration and later exceed the VAT threshold?

If your annual VAT taxable turnover again exceeds the registration threshold, you must re-register for VAT with HMRC without delay.

2. Can I backdate my VAT cancellation?

No, you cannot retrospectively cancel VAT registration. The cancellation date is either the date you apply or a later date agreed with HMRC. It is never earlier.

3. Do I need to inform customers when I cancel VAT registration?

Yes, you’ll need to issue new invoices without VAT after your official cancellation date and communicate changes as appropriate. This ensures customers are charged accurately and helps avoid confusion.