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Do you know when to deregister your company for Vat?

by , 05 April 2013
As part of the UK Budget for 2013/14 the compulsory Vat registration threshold has risen to £79,000. In South Africa, you need to register your business with SARS for Vat purposes if you make taxable supplies in excess of R1 million in any 12-month consecutive period. But did you know you can deregister for Vat, too? Here's what you need to know...

Vat registration or deregistration dilemmas tend to plague business owners, says Vat Matters.
For example, many are aware of the compulsory registration for Vat, but many don't realise that you're allowed to deregister for Vat, provided you meet certain conditions.
For example, in the UK, the Vat deregistration threshold has just risen to £77,000, says ByteStart.
In South Africa, you'd have to prove that your business is no longer liable to be registered – you can do so if the value of your taxable supplies falls below the threshold of R1 million in any consecutive 12 month period.
Obviously, you can also deregister for Vat if your business closes down or if you conscientiously went through the Vat registration process only for your business to never actually start up in the first place.

Here are the conditions where SARS will automatically deregister you from its Vat system.
Three reasons SARS can deregister your business for Vat
SARS can cancel your Vat registration if: 
  1. You registered voluntarily and have no fixed place of business;
  2. You haven't kept proper accounting records of the enterprise or;
  3. You haven't opened a bank account for your business, says SARS.
Deregister from the Vat system and apply for turnover tax instead!
But did you know that you can also de-register from the Vat system if you register for turnover tax for micro businesses instead?
Turnover tax apples to small businesses with a turnover of R1 million or less per annum with a year-end in February, says MoneyWeb Tax.
The Vat exclusion is particularly significant as it removes a huge administrative burden based on the careful record keeping Vat requires, says FSP Business.

Just remember that on the date of deregistration, all assets need to be valued, with Vat on this capital declared and paid to SARS, says Dryk Financial Services.
Then, all you need to do is submit the Turnover Tax Application Form (TT01) to SARS, as this form includes the simultaneous cancellation of Vat.
Simple as that!

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