Follow this important Vat registration rule when you split your business into two organisations
Let's say you run a small farm and a produce stall under one business name. They share the same Vat number, but you decide to separate the two sides into two separate organisations because the farm stall is so popular.
This action has Vat registration implications you must comply with. If you don't, SARS could penalise both organisations.
To avoid a 200% for both companies fines, here's the crucial Vat registration rule you must follow...
Comply with this Vat registration rule if you split your business into two organisations
If you have a business that you split into two organisations, both need their own Vat number.
To help explain this situation, here's the answer to question RenSln asked on the AccountingandTaxClub.co.za
Q: 'We have a church and a school that amalgamated into the name of church. The rental income of both is accounted for on the Vat 201 (Vat return) which is in the name of the church. But the bank accounts are separate.
Recently, the church and the school have separated for business. The church's income is less than R1 million, so we're not charging tenants Vat. But the school is still using the church's old Vat number in its accounting. Should we register the school separately, for its own Vat number, or can we ask SARS to just transfer the Vat number from the church to the school?'
Dee Bezuidenhout, an expert on the club, answered saying the school needs its own Vat number. To do this, RenSln must register it for Vat separately.
But registration is a complicated process and, just because you did it once, doesn't mean it will go smoothly this time.
But you can help the process along by making sure you have these nine documents.
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When you register your separate organisation, have these nine documents on hand
When you apply to register as a Vat vendor, submit a copy of the following supporting documentation with your VAT101 form:
A certified copy of your ID document;
A copy of the partnership agreement and articles of association;
Certified copies of your company registration documents;
An original letter from the bank where you hold your business account, confirming your account details, with the bank's stamp on it;
A business plan or proof of your turnover (invoices);
A letter from your accountant to confirm his appointment;
Proof of your business address (e.g. municipal account, telephone account or rental agreement);
The residential municipal account of the public officer; and
Bank statements since the bank account was opened, or for the last three months.
If you have all these documents ready and waiting, your Vat registration will go smoothly.
This way, you can make sure both organisations can operate legally and comply with Vat laws.
To find out more tips on how to make your Vat registration seamless, check out The A-Z of Vat Registrations.
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