Tax - Taking over company from a family member that passed away.

[jwaconmon]

Hi Everyone

My brother registered a company in 2009. The company started trading in 2014 and we took it over last year on the 1 December 2017.

The company was not registered for Income Tax, Vat etc. We now registered the company for Income Tax and Vat. My question is, will the new shareholders be responsible for any tax that was not paid when my brother was doing business under the company name?

It is a small company and the best year was 2015, I see the annual turn over was more than R500 000.

We basically want to keep the company open but if we are going to be held responsible for mistakes he made I would rather consider closing down the company.

Any recommendations?

[Dave A]

With a maximum annual turnover of less than R1 million per annum, being registered for VAT is not compulsory so there should be no historical liability. Income tax is a different matter though.

[Mpekza]

Hi Everyone

My brother registered a company in 2009. The company started trading in 2014 and we took it over last year on the 1 December 2017.

The company was not registered for Income Tax, Vat etc. We now registered the company for Income Tax and Vat. My question is, will the new shareholders be responsible for any tax that was not paid when my brother was doing business under the company name?

It is a small company and the best year was 2015, I see the annual turn over was more than R500 000.

We basically want to keep the company open but if we are going to be held responsible for mistakes he made I would rather consider closing down the company.

Any recommendations?

For VAT, no liability will exist provided that your brother did not opt for voluntary registration for VAT, in which case then you may be liable. For tax, however, the liability will have to be settled. This is because the change in shareholding does not affect the company's liabilities. The company is an independent entity altogether and is recognized separately from its directors/shareholders and the liability exists for the company, not owners.

[Andromeda]

Hi,
Bear in mind that your brother is most likely the Public Officer, unless this has been changed at SARS. In that case they will hold him liable for any unpaid taxes if the company is not in a position to pay it, regardless of who the present shareholders and directors are.

[jwaconmon]

Hi Everyone

Thank you. I am looking for an accountant to join JWA part time as the company is still small.

Can you please contact me on 0648410171 if interested.

[Mpekza]

Hi Everyone

Thank you. I am looking for an accountant to join JWA part time as the company is still small.

Can you please contact me on 0648410171 if interested.

Hi, where are you based?