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TOPIC: VAT implictations regarding buying a Going Concern

VAT implictations regarding buying a Going Concern 9 years 7 months ago #2554

Hi everyone

We are in the process of buying a business, I have registered a PTY (Ltd) - (we are not taking over the existing CC) but still waiting for the documentation to come through. Please can someone advise on the VAT implications. Do I have to wait to be VAT registered before signing in order for it to be taxed at 0% or is there someway I can 'back date' the registation. This is the only thing holding up the sale as I dont want to have to pay 14% on the sale price.

Thanks in advance!
Jane
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Re: VAT implictations regarding buying a Going Concern 9 years 7 months ago #2555

  • Matthew Haddon
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Good morning Jane

yes, you do need to have a VAT number before the transfer at 0% can take place but since the transaction hasn't happened yet,there is no need to back date the registration. What you need to do is get a letter from the current owners stating the sale is pending your VAT registration and a copy of the sale agreement. Take this info to your nearest SARS branch office with your VAT101 and all other supporting docs and get your Pty Ltd registered for VAT.

The catch 22 is that SARS do not normally register businesses that have not traded before without proof of turn over of at least R50K but this is where that letter confirming the pending sale will help and the fact that the entity you are buying is already VAT registered will also help to justify registering your company as a VAT vendor before the transaction takes place.

I would suggest requesting a tax clearance from the current owners for the the CC as yo do not want to purchase old tax issues that have not been resolved yet.

Good luck.

Matthew
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The following user(s) said Thank You: Dylan Phelan, Rekha

Re: VAT implictations regarding buying a Going Concern 9 years 7 months ago #2564

Thanks Matthew, thats a great help!
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