Businesses given more time to file return at VAT deregistration

Sara White, Editor, Business & Accountancy Daily. Croner-i

A minor tweak to tax rules will see a relaxation of the deadline for final VAT returns when a business deregisters from VAT in event of HMRC processing delays.

The change comes into effect from 14 June 2025 and gives HMRC the power to allow taxpayers an extension to the time limit for filing a final return from the current one month deadline.

Final returns are required from taxable persons when they deregister for VAT.

The regulations provide a legislative basis to the current administrative practice to ensure fairness and equity in the VAT de-registration process by providing businesses additional time to submit their final return where necessary.

It allows HMRC to extend the time period where processing delay and compliance activity make it difficult or impossible for a business to meet the regular deadline.

Under the VAT regulations, a business cancelling its VAT registration must submit its final return within one month from the date the cancellation takes effect, and an additional week is allowed for electronic returns.

Andrew Clarke, VAT director at Deloitte, said: ‘In practice, HMRC processing can delay the issue of the final return, meaning that the business is not able to meet the submission and payment deadlines, and would potentially incur penalties and interest. Accordingly, HMRC has extended the time limit by administrative concession.’

At the moment, HMRC can extend the time limit for businesses to submit a final return through an administrative concession – typically providing that the same one month and seven-day deadline should apply instead from the date on which the final return is available.

This will affect taxpayers liable or entitled to be registered for VAT on or after 14 June 2025.

The change is set out in a statutory instrument, The Value Added Tax (Amendment) Regulations 2025, which amends regulation 25 of the Value Added Tax Regulations 1995.