Change in Partnership
If one of the partners leaves, or another one joins, or even if one of them dies, then your partnership ends, and you'll be required to create a new partnership agreement.
ou DON'T need to cancel the VAT registration of your old partnership when your partners change.
You also don't need to apply for a new VAT number in your new partnership.
BUT you MUST complete a VAT128 form and submit it to SARS.
Formation of a new partnership
If you form a new partnership, you MUST then change the registration of any fixed properties (i.e. any tangible property which is used to produce income)
under your old partnership, and register them in the name of your new partnership. Transfer duty will be payable.
This is unless the transaction can qualify for the VAT zero rating, as the transfer of a going concern.
BUT if the partnership changes to a sole trader, then you must deregister the partnership's VAT registration, and the sole trader must now apply for a new VAT number.
Here's an example…
William and Harry are sole traders, and they combine to form a partnership.
They must now apply for a new VAT number.
Peter joins the partnership and the name of the company changes, but the partnership still retains the old VAT registration and number.
William later decides to leave the partnership and the name of the company changes again, and still the partnership retains its old VAT registration and number.
Harry and Peter then leave the partnership, after which Peter decides to carry on the business under his own name, as a sole trader.
Peter will now be required to get a new VAT registration and number.
NOTE: You are entitled to request a new VAT registration and number if the partners change.
*To learn more on partnerships and VAT, such as on the forms required, page over to chapter P 14: Partnerships and VAT
in your Practical VAT Loose Leaf Service
handbook, or click here
to order your copy today.