VAT registered businesses that have been adversely affected by Coronavirus, and where their turnover has never been much over the VAT registration threshold, should consider the advantages of deregistering for VAT temporarily.

This could result in no VAT being due on the sales for the initial months of trade commencement.

Things to consider:

  • You need to be able to demonstrate that your turnover for the next 12 months will not exceed £83k i.e. it doesn’t matter if you were below £83k for previous 12 months because you have been closed for 2 months, you need to be below £83k going forward because you will be closed for the next, say, 2 months
  • So ideally this needs to be done as soon as possible
  • You may have to repay VAT claimed on stock and assets held at date of deregistration if the VAT due on the value of these exceeds £1,000
  • Once you have deregistered you will have to monitor your turnover on a monthly basis going forward to establish when you need to register again i.e. when turnover in previous 12 months exceeds £85k
  • This might not benefit everyone that it applies to, it does need to be carefully considered, so please get in touch before proceeding
  • HMRC might refuse such an application – but the worse they can say is no!

So if you are VAT registered and you think your turnover in the next 12 months is likely to be below £83k please get in touch with your usual contact at Sidaways and we can chat things through.