There are many reasons why a business might want to de-register for VAT but the most common reason is that the business turnover has fallen below the current VAT threshold (see table below).
There are several benefits to sole traders and smaller businesses in not being VAT registered, especially those whose business is based on a human resource (labour) rather than buying/selling products. If the business is able to cut it's overheads accordingly, many businesses that have previously struggled to make profit whilst VAT registered have prospered when they lose the burden of VAT.
Some of the key benefits of not being registered for VAT include:
You need to complete the form VAT 7 which can be downloaded and printed by clicking this link.
HMRC also provide an overview of the de-registration process which can be view by clicking this link.
We would strongly suggest you seek advice from your Accountant before making any decisions regarding VAT registration.Current VAT Threshold (2011)
The current (2011) VAT threshold for businesses who do not wish to register voluntarily for VAT is set out as follows:
|Maximum Income Per Year:||£70,000.00|
|Average Monthly Income:||£5833.33|
|Average Weekly Income:||£1346.15|