At a glance
Who this applies to
VAT-registered construction companies finishing invoices and cancelling registration.
When to act
Cancel within 30 days of becoming ineligible. Your final return has its own due date.
What you need
Customer VAT and CIS details and any written end-user notification.
Use the reverse charge conditions to choose the treatment of your last invoice. Check unpaid retentions separately, because their VAT tax point is the earlier of payment or issuing their VAT invoice.
Finish your invoices and VAT registration
1. Check your customer and supply
Use the reverse charge where both businesses are UK VAT registered, payment is reported under CIS, services are standard or reduced rated, you are not supplying staff as an employment business, and the customer has not confirmed in writing that it is an end user or intermediary supplier. Check the VAT number and CIS status; ask the customer about reporting if the online check does not show its contractor registration.
2. Write the invoice correctly
Include the usual VAT invoice details and wording explaining that the customer accounts for VAT. Show the VAT amount; use the rate only if the amount cannot be shown. Leave that VAT out of the sum you charge.
3. Check the contract’s tax points
Stage payments generally use the earlier payment/VAT-invoice rule. For single-payment work, completion and invoice/payment timing can affect the tax point. Check these dates before choosing a cancellation date.
4. Cancel and complete the final return
Submit your final return through the cancellation date by HMRC’s due date. Include VAT on stock/assets only if you reclaimed or could have reclaimed VAT and the total VAT due is over £1,000.
If the VAT registration number transfers to someone taking over the business as a going concern, the final-return requirement has an exception. Check HMRC’s transfer guidance for that route.
Illustrative example
Illustrative figures: assume £5,000 of work meeting all reverse charge conditions, with a 20% standard VAT rate. The calculation is £5,000 × 20% = £1,000.
Show £1,000 as VAT for the customer to account for, and charge £5,000. The VAT is excluded from your charge; this example does not calculate CIS deductions.
Plan the company closure
Before applying for strike-off, wait 3 months after your company’s last trading or stock sale. Check the other eligibility conditions too; this waiting period is not the time it takes to dissolve the company.
Within 7 days of applying, send a copy to members, creditors, employees, pension fund managers or trustees and any directors who did not sign. Include landlords, staff and voucher holders where your company owes them money.
Frequently asked questions
Can I wait for missing purchase invoices?
Submit the final return on time. Later invoices can support a separate claim if you have not already claimed that VAT and have proper evidence; recovery restrictions still apply.
What if an invoice needs issuing after cancellation?
Do not issue invoices showing your old VAT number, or VAT invoices for supplies made after cancellation. Ask HMRC how to handle an invoice for work supplied beforehand.
How long does HMRC take to confirm cancellation?
HMRC usually confirms within 40 working days, though busy periods can take longer. Check the reply for your official cancellation date.