VAT - 21.04.2005

After deregistration?

Late invoices

The scenario. There can be many reasons for de-registration from VAT; retirement, insolvency, selling the business, making a company dormant, ceasing to make taxable supplies, falling below the VAT deregistration limit (currently £58,000 pa) etc. It happens, but just maybe you hadn’t received the necessary evidence (e.g. a VAT invoice) to make all the claims you could by the time your final VAT return was due.

For example, let’s say one of your businesses deregistered for VAT on May 1, 2005 because turnover had fallen below the deregistration threshold. You then sent your final VAT return on May 31, 2005. You receive invoices in July 2005 relating to the period prior to deregistration.

Tip 1. Use Form VAT 427 (VAT 426 if your business is insolvent) to claim input tax on goods or services supplied to you for business purposes while you were registered that you didn’t claim on either your normal returns or on your final return. (These forms can be obtained from the National Advice Service or downloaded from Customs’ website http//:www.hmce.gov.uk).

Tip 2. Send your evidence (the invoices themselves) confirming that the goods or services were purchased before deregistration, with the claim form. Once the VATman has agreed your claim the original invoices will be stamped and returned to you.

The central unit that deals with all this is: Accounting Adjustments (VAT 427 team), 3rd Floor Southeast, Queens Dock, Liverpool, L74 4AA.

Partially exempt businesses. Unfortunately, if your business was partly exempt, any VAT relating to an exempt supply cannot be reclaimed post deregistration.

Errors in your favour

It’s worth checking. Don’t just think in terms of late invoices. You can also use Form VAT 427 to make a claim for input tax where you made an error (in your favour) whilst registered and didn’t make a claim at the time despite holding the proper evidence. For example, check back to see if you’ve claimed all the bad debt relief you are entitled to and/or VAT on employees’ business mileage expense claims.

Services post registration

You can claim the VAT back on services received after deregistration providing they relate to your business activities while you were VAT registered. For example, again let’s say your businesses deregistered for VAT on May 1, 2005 and you sent your final VAT return on May 31, 2005. Your annual account year finished on February 28. As requested, your accountant completes your accounts and sends you a bill including VAT on his fees. Unfortunately you’ve already sent in your “final” return. However, you can claim the VAT back because it relates to the time when you were registered for VAT.

Time limit

Of course all these claims are subject to the usual three year limit for reclaiming VAT; starting from the date the invoices are sent to you. Also bear in mind that any payment due to you could be delayed if the business’ bank account has also been closed. So perhaps you don’t need to close it so soon.