Commentary

V7.159 Output tax on stock and assets held at time of VAT deregistration

Part V7 Tax planning
Part V7 Tax planning | Commentary

V7.159 Output tax on stock and assets held at time of VAT deregistration

Part V7 Tax planning | Commentary

Consequences of deregistration

V7.159 Output tax on stock and assets held at time of VAT deregistration

When a business deregisters from VAT, it must account for output tax on any stocks and assets held at the time of deregistration. However, VATA 1994, Sch 4, para 3 specifies that no output tax is due if the total output tax on such stocks assets would be less than £1,000 (ie gross value of less than £6,000 at a VAT rate of 20%).

With regard to these rules, there are a number of important points to take into account, all of which help to reduce the output tax liability, in many cases to zero:

  1.  

    •     output tax is not due on any stocks or assets

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