VATDREG16050 - Stocks and assets on hand: general provisions

The legal provisions relating to goods and capital assets on hand at the time of deregistration are contained in the VAT Act 1994, Schedule 4, paragraph 8. Under that provision a person ceasing to be a taxable person is deemed to have supplied the goods forming part of the business assets immediately before ceasing to be a taxable person. The effect of this is that tax is normally payable on the goods and assets, which remain on hand at the time of deregistration unless the trader is eligible to take advantage of any reliefs available. You will find details of those reliefs and further guidance on stocks and assets in VATSC - VAT Supply and consideration.

You may also need to consider any assets on hand which fall within The Capital Goods Scheme. You will find general guidance on the scheme in VATLP - VAT Land and Property and more specific guidance on how to treat assets on hand at deregistration which fall within the scheme in Notice 706/2 Capital Goods Scheme. In normal circumstances you need not make a specific enquiry about the goods and capital assets situation. However, if the opportunity arises, make an estimate of the tax due on them at deregistration and record the details in case you need to issue an assessment for the final period.

Please note that traders who are cancelling their registration to join the Flat-Rate Scheme for Farmers do not have to account for tax on their stocks and assets on hand.