Two issues that I need advice on;
Firstly, is VAT de-registration as easy and simple as it seems to indicate in HMRC booklets?
I have a business which has been VAT registered for 4 years. Sales are made up of a mix of 2nd-hand vehicles and spare parts. For various reasons, I have decided to stop selling 2nd-hand vehicles and only continue selling spares.
Turnover for 2005 remains over the VAT threshold based on selling off the existing stock of 2nd-hand vehicles. However sales of spares for 2005 is only approx Â£45k. Without further purchases of 2nd-hand vehicles, the forecast turnover for 2006 is also expected to be Â£45k. (well under the current VAT de-registration threshold). Does it sound reasonable to de-register based on this forecasted turnover (my year end is 31/12) and if so am I likely to have any problems/comeback from HMRC?
One final issue, I have always estimated stock levels for spares for my annual accounts. When I deregister for VAT the estimated stock value is likely to be around Â£6k and is therefore (I am led to believe) likely to fall under the amount for which VAT is payable on the final VAT return. Is this likely to cause problems, as HMRC seems to be concerned about under-declared stock values in their booklet? Should I also do a stock take (very difficult due to the hundreds of small spare parts involved)? A stock take is further complicated by the fact that many spares that I have originate from when I set up the business 10 years ago and no VAT input tax has been claimed on them. So do I just stock-take the items bought in since VAT registration or do I have to also include older obsolete items?
Any advice will be appreciated.