VAT alert – VAT & property – deregistration

VAT alert – VAT & property – deregistration
If a business deregisters for VAT purposes, and it has stock or assets on hand on which it recovered VAT as input tax, it may have to pay output tax on the market value because a deemed supply has taken place.
The same rule can apply to commercial buildings which are standard-rated either because they are new or subject to the option to tax.  For example, a business deregisters from VAT with an opted property on hand worth £1m.  VAT of £166,666 will be due to HMRC and an absolute cost if it cannot be passed on.
We are aware that HMRC are actively carrying out checks to identify businesses which have deregistered with properties subject to the option to tax on hand.  So don’t get caught out – come and speak to our VAT specialists who will be pleased to advise…….  Or if you believe your business has not accounted correctly on the deemed supply of goods on hand at deregistration, and a disclosure to HM Revenue & Customs is required, we would also be pleased to assist in correcting the position retrospectively and addressing the penalty position.