I registered for VAT voluntarily when setting up my business and would like to deregister as it is highly unlikely my turnover will exceed £75,000, I have stock at the moment of around £3,500 in cost value. What are the implications of this?
The current VAT registration threshold is £77,000 and the deregistration threshold, as you say is £75,000. It is not as easy to deregister voluntarily as it is to voluntarily register. This because HMRC wants to ensure that businesses are not just receiving their input tax deduction without accounting for output VAT, ie that the business does not receive all the advantages of receiving back VAT on purchases but then does not pay the VAT on its sales.
If you want to deregister voluntarily, then you need to tell HMRC the date that you want your VAT registration to stop. This will be either the date they receive your request or an agreed later date. You should continue to charge and account for VAT until HMRC confirms that they have cancelled your registration. You need to explain why you consider you will not reach the registration turnover in the future. If HMRC doesn't accept your request to cancel your VAT registration, you'll have to continue charging for and accounting VAT.
If the circumstances of your business changes in the years to come and it looks as though you turnover may exceed the registration threshold then you will need to register again.
See also: Catering and VAT