VATREG31100 - Corrections to the register - incorrect entries on the register: invalid registrations

An invalid registration occurs where a person who should never have been registered registers for VAT.

Examples of invalid registrations are

  • no taxable supplies or relevant acquisitions or any intention of making any
  • supplies were not in the course of business
  • the person registered was not the one making, or intending to make, taxable or relevant supplies or relevant acquisitions (However, remember that the correct person may have a liability or entitlement to register.).

Action to correct an invalid registration

If the registration is invalid because no taxable or relevant supplies or relevant acquisitions have been made, or there has never been an intention to make them, the registration should be cancelled.

The removal should be effected under the provisions of the VAT Act 1994, Schedule 1, paragraph 13(3); Schedule 2, paragraph 6(2); Schedule 3, paragraph 6(3) or Schedule 3A, paragraph 6(2); that is, with effect from the date of admission to the register.

If the registration is invalid because the wrong person has been admitted to the register, this can be dealt with in accordance with VATREG31150.

Final adjustments to the VAT account

When a registration is considered invalid, this means that the trader was not a taxable person, so tax is not payable on stocks and assets. Neither is there any entitlement to input tax. The VAT account can be cleared by either

  • a refund to the trader, or
  • recovery from the trader

whichever is applicable.

Corrective action should be taken as follows:

  • (a) In periods where the trader has made a net payment to us, a refund of the amount paid may be made under section 80 VAT Act 1994, subject to capping and unjust enrichment considerations.
  • (b) In periods where the trader has received a repayment, an assessment should be made to recover the repayment under section 73(3) VAT Act 1994, subject to capping.

Further Guidance can be found on VAT refunds in VR and on assessments and error correction in VAEC. (External users can find this guidance at http://www.hmrc.gov.uk/manuals/vrmanual/index.htm and http://www.hmrc.gov.uk/manuals/vaecmanual/index.htm).