CAN I CANCEL MY REGISTRATION?

WHEN CAN I CANCEL MY REGISTRATION?

You must cancel your registration if: -

• You close down or sell your business. If you have more than one business and are not closing down or selling them all, you should not cancel, depending on the level of taxable turnover of your remaining businesses
• You cease to make taxable supplies of goods or services as part of a business activity. This may be a result of;change of legal status, for example:
  (i) you are a sole proprietor and form a partnership;
  (ii) you dissolve a partnership and run the business as a sole proprietor;
  (iii) your sole proprietorship or partnership is replaced by an incorporated company;
  (iv) your company is wound up and replaced by a partnership or sole proprietorship
• you were allowed registration as an investment trader because you intended to make taxable supplies and you no longer do so, OR you have been registered for a 4 years and not made any taxable supplies. IN THIS CASE YOU WILL HAVE TO REPAY ANY REFUNDS YOU HAVE RECEIVED TO THE UGANDA REVENUE AUTHORITY.
• you stop making taxable supplies for any other reason, [e.g.] if a VAT registered sole proprietor dies, his executors have the responsibility of canceling his registration].
  In any of the above cases you must inform your VAT office WITHIN 14 DAYS, of the change. An application for cancellation of registration can be
  obtained from any VAT Office.

Failure to apply for cancellation of the VAT registration at the proper time may render you liable to a financial penalty. If you are not sure about your legal responsibility to cancel your registration, you should consult your VAT office for advice.

WHEN CAN I ASK TO HAVE MY REGISTRA-TION CANCELLED?

You can ask for cancellation if: -

• you can satisfy the Commissioner General that for the most recent period of 3 Calendar months, the value of your taxable supplies exclusive of VAT did not exceed 12.5 million Shillings AND the value of your taxable supplies exclusive of VAT did not exceed 50 million Shillings for the previous 12 Calendar months. You may only apply for cancellation under these provisions after 2 years from the date of registration IF you registered voluntarily [i.e. your taxable turnover at the time of registration did not exceed the registration threshold of 12.5 million Shillings for 3 Calendar months.
• You registered voluntarily, and after 2 years the value of your taxable supplies is below the limits defined above.
• Change of business to Exempt supplies.

ARE THERE ANY DISADVANTAGES FOR CANCELLATION?
It depends on your type of business. The possible disadvantages you should consider are:-

• You will no longer be able to reclaim the VAT paid on your standard rated purchases;
• If you make standard-rated supplies to other VAT registered taxpayers, you will be unable to issue tax invoices on which your registered customer can claim a credit for the tax you may have been charged. Your customer will therefore have to charge a higher price for his supplies since he cannot recover the VAT. In this case he might choose to trade with another VAT registered supplier and you may possibly lose business;
• If you have stock and assets at hand on which you have received a credit for VAT, you will have to account for this VAT to the Uganda Revenue Authority before your registration is cancelled. The exception to this requirement is where you are transferring all the goods remaining in your business as part of the transfer of your business as a going concern to another VAT registered person. In these circumstances the supply of these goods is exempt.

CAN I STILL ISSUE TAX INVOICES?

NO. From the date your registration is cancelled you must not charge VAT or issue tax
invoices for any supplies you make. You must not show your cancelled registration
number on invoices you issue as it no longer exits.

Remember if you issue a tax invoice after your cancellation of registration you will be rendering yourself liable to a financial penalty because this is fraud.

CAN I RECLAIM ANY VAT I AM CHARGED AFTER CANCELLATION OF MY REGISTRATION?

NO. After your registration is cancelled you cannot claim a refund of VAT incurred on any goods or services you purchase because you have ceased to be VAT registered.

WHAT ABOUT STOCK AND ASSETS AT HAND AT THE TIME OF CANCELLATION OF MY REGISTRATION?
The VAT treatment of your business stock and assets would depend on why your registration was cancelled.

• If you are closing the business, or continuing to trade below the registration limits, you must account for VAT on all stock and assets at hand at the close of business on the day your registration is cancelled.
  You should value goods on which tax is due at a fair current market price in their present condition and account for the VAT on your final return which will be issued by the VAT office.

This means that you will have no tax liability in respect of: -

• goods bought from unregistered persons;
• passenger automobile including spare parts unless you are in the business of dealing in or hiring such vehicles;
• goods purchased for entertainment unless you are in the business of providing entertainment;
• goods that have been directly attributed to an exempt business activity;
• goods not bought for business purposes;
• goods bought before 6 months to the date of registration whose VAT was not offset or refunded transferring stocks and assets as part of a transfer of a business as a going concern:

(i) to another VAT registered person, YOU AND THE PERSON TAKING OVER THE BUSINESS MUST NOTIFY THE COMMISSIONER GENERAL IN WRITING THE
DETAILS OF THE TRANSFER WITHIN 21 DAYS FROM THE DATE OF THE TRANSFER.

In these circumstances you MUST NOT CHARGE VAT as the supply is EXEMPT from VAT. However you do not have to take account of the value of this exempt supply in calculating the input tax you can reclaim.

(ii) to someone who is not registered for VAT, you must account for VAT on them in the normal way.

DO I STILL NEED TO KEEP MY VAT RECORDS?
YES. You must keep all the business records related to your VAT registration for a period of at least 6 years.

WHAT IF I MAKE EXEMPT AND TAXABLE SUPPLIES?
You must make an annual adjustment of your deductible input tax on your final return. The period of this final adjustment will be from the beginning of the calendar year to the effective date of cancellation. You must include the adjustment on your final return.

WHAT HAPPENS IF I APPLY TO CANCEL MY VAT REGISTRATION?
The VAT office will notify you if the application is acceptable and the date from which your registration is to be cancelled.

If it is not accepted you will have to continue to account for VAT in the normalway. If it is accepted you will be issued with a final VAT return for the period up to the date of cancellation of your registration. You must complete the return in the normal way and include any tax due on stock and assets. Your VAT Registration Certificate must be surrendered to the VAT office with the final return within 15 days of the date of cancellation. You must pay any tax due on the return within the same 15 days period.

The VAT office will confirm a final cancellation of your registration when they are satisfied with your final return.

REMINDER: IF YOU START UP A BUSINESS WHOSE TAXABLE TURNOVER EXCEEDS THE REGISTRATION THRESHOLD OR YOUR EXISTING BUSINESS EXCEEDS THE LIMITS, YOU NEED TO APPLY FOR REGISTRATION AGAIN.

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