If you're running a business in the UK, there may come a time when being VAT registered no longer makes sense. Maybe your turnover has dropped, you've stopped trading, or your business has changed and VAT just isn’t relevant anymore. 

Whatever the reason, cancelling your VAT registration (also called deregistering) is fairly straightforward, but there are a few rules and deadlines you’ll want to get right.

The steps to deregister for VAT

Here’s a simple step-by-step guide to walk you through the process.

Step 1: Check if you need to cancel

You must cancel your VAT registration if:

• You’ve stopped trading or making VAT-taxable sales
• You’ve joined a VAT group
• You’ve sold or transferred your business

You can ask HMRC to cancel your registration if:

• Your taxable turnover is below the current threshold of £88,000
• Most of your sales are zero-rated and you’re applying for an exemption

In cases where you’re required to cancel, you need to inform HMRC within 30 days of becoming ineligible. If you don’t, you could be fined.

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Step 2: Choose how to cancel

Online‍

If you're set up with a Government Gateway account and your business structure is unchanged, the simplest way to cancel is online. Just log into your VAT account at gov.uk, choose 'Cancel VAT registration' and follow the prompts. You’ll need to give a reason and select your intended cancellation date.

By post‍

You’ll need to cancel by post if:

• You’ve changed your business structure — for example, from a Sole Trader to a Limited Company.
  
• You’ve sold your business and the new owner doesn’t want to keep your VAT number.
  
• You’re closing a VAT group.
• Your business stopped trading after liquidation.
  

In those cases, fill out form VAT7 and send it to HMRC. If you're cancelling a VAT group registration, you may also need to include forms VAT50 and VAT51.

Step 3: Wait for HMRC to confirm

HMRC will usually confirm your deregistration within three weeks. If you applied online, you'll get a notification in your VAT account. If you applied by post, they'll send you a letter.

Once your VAT registration is officially cancelled, you must stop charging VAT and remove your VAT number from invoices, your website, and any other documents.

Step 4: Submit your final VAT return

You’ll need to file one last VAT return covering the period up to your cancellation date. This should include any assets or stock you still have if you claimed VAT on them and the total VAT due is more than £1,000.

Step 5: Keep your VAT records

Even though you’ve deregistered, HMRC requires you to keep all VAT records for at least six years. That includes sales and purchase invoices, VAT returns, and any correspondence with HMRC.

Step 6: Update your paperwork

Once you’re deregistered, make sure to:

• Remove VAT from your invoices
• Take your VAT number off your stationery and website
• Let any clients using self-billing know that you’re no longer VAT-registered

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Bonus tip

If you receive any invoices after you’ve deregistered and want to reclaim VAT, you might be able to use form VAT427. There’s also scope to claim relief on bad debts if needed.

How Crunch can help

Whether you’re VAT registered or not, Crunch is here to make accounting simpler. Our expert team and easy-to-use software take the stress out of bookkeeping, tax returns, and staying compliant with HMRC. We support Sole Traders and Limited Companies at every stage — from starting out and registering for VAT, to deciding when it’s the right time to cancel.

You’ll get real human support when you need it, clever tools to manage your finances, and the confidence that everything’s done properly.

Need help working out if deregistering is the right move? We’ve got your back.

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