[Question] No longer a vat vender

[Isetech]

Lets say you start a plumbing business register as a sole prop and register with VAT, 10 years later you close the sole proprietor operations, close the bank account and upgrade to a close corporation. Stop sending " Tax invoices" to customers and start operating as a CC.

Does the CC which has been dormant for 6 years, automatically become VAT registered because you stop trading as a sole prop?

Why would SARS now 10 years later issue a final demand giving you 10 days to sort it out, otherwise they will issue a summons, why not not 4/5/6/7 or 8 years ago.

Do you have to de register with Vat if you no operate as sole prop ?

I thought this was all sorted out 10 years ago, now suddenly today I get a final demand from SARS.

[Dave A]

Lets say you start a plumbing business register as a sole prop and register with VAT, 10 years later you close the sole proprietor operations, close the bank account and upgrade to a close corporation. Stop sending " Tax invoices" to customers and start operating as a CC.

Does the CC which has been dormant for 6 years, automatically become VAT registered because you stop trading as a sole prop?

The CC and the sole proprietor are two different legal entities. And also two different tax entities.

Why would SARS now 10 years later issue a final demand giving you 10 days to sort it out, otherwise they will issue a summons, why not not 4/5/6/7 or 8 years ago.

Do you have to de register with Vat if you no operate as sole prop ?

Yes. If the individual sole proprietor was registered for VAT and ceases trading (moves the trading into a juristic person such as a cc or company), the individual will have to deregister to stop being a VAT Vendor in the eyes of SARS.

As a process, VAT deregistration can yield unanticipated consequences at the best of times (i.e. when it is a juristic person with just business assets to deal with). I shudder to think what it might yield in the way of consequences for a natural person as you will have to process all assets in your name.

[Isetech]

Just imagine trying to immigrate and you have this hanging over your head. I see SARS is targeting people who have left and think they are in the clear because they now live in another country.

[Isetech]

Thank goodness I have an accountant to assist and get everything up to date.

A wise man once told me, always make sure your tax is done properly, I let a fool do my taxes and it ended up costing me over R80k plus the R10k he ran away with.

It looks like I will be buying a new vehicle sooner than I thought.

[Dave A]

I have always said when you get to the point where you need to register for VAT, it's time to register a company (or CC back in the day ). Being VAT registered as a sole proprietor just has too many consequences in other areas of your financial life.

[Isetech]

I didn't expect to grow so quickly, I went from working out the boot, by the time I wiped sweats out my eyes I had already exceeded the threshold. I did what the accountant advised and registered and paid what was due. I scaled back to the boot of the car many years ago.

This is why I stick to doing what I do best and leave the financial stuff for the people who specialise in that department.

Lets this be a warning to all you little or big guys out there, if there is one thing you need to get right , days years and months tick by, things will happen, business will go up and down, like death, one thing is for certain, the tax man will collect.