This site uses cookies. By continuing to browse the site you are agreeing to our use of cookies. To find out more about cookies on this website and how to delete cookies, see our privacy notice.

The Pitfalls of VAT Deregistration for Small Businesses

Shared from Tax Insider: The Pitfalls of VAT Deregistration for Small Businesses
By Andrew Needham, July 2025

Andrew Needham looks at some possible traps a business can fall into when deregistering from VAT that can result in an unexpected bill from HMRC.  

Businesses have been going through difficult times recently and some smaller businesses selling to the public, particularly services, find that they have fallen below the VAT deregistration threshold (currently £88,000 p.a.) and think that they would be better off deregistered.  

The reasoning behind considering VAT deregistration is that they can either decrease their prices by the VAT amount and become more competitive, keep their prices the same and increase their profit by the VAT amount or even do a mixture of the two. 

Potential problems 

However, there is a potential pitfall to be considered before contemplating deregistering for VAT.  When a business deregisters from VAT, if the VAT on the

This is one of our 2782 Premium articles

To see this article in full and unlock access to our complete library of 2782 articles click 'subscribe & unlock' below:
SUBSCRIBE & UNLOCK

Subscriptions include a 14 day free trial
+ money back satisfaction guarantee