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Thread: No longer a vat vender

  1. #1
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    No longer a vat vender

    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.

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    Site Caretaker Dave A's Avatar
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    Quote Originally Posted by Isetech View Post
    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.

    Quote Originally Posted by Isetech View Post
    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.

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    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.

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    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.

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    Site Caretaker Dave A's Avatar
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    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.

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    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.

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