Too early to cancel

Entitlement of HMRC to cancel a company’s VAT registration compulsorily

The taxpayer was in business selling new and used yachts parts and equipment designing and building yachts and as a broker in relation to the sale of used yachts. It had been VAT registered since 1973.

Between 2007 and 2010 it sold the brokerage business and entered the holiday villa market in Florida but left in 2013.

HMRC cancelled the company’s VAT registration on 23 June 2010 on the basis that it had not made taxable supplies since October 2007. It issued an assessment for £2 305 to disallow input tax claimed in the periods October 2010 to April 2013. The deregistration date was fixed at one day after the company’s last receipt of taxable income.

The taxpayer argued that the business had intended to make future sales after June 2010 and provided correspondence linked to...