Vendor runs two separate trades, each individual trade is under the vat threshold, but together they are above it so is vat registered. Vendor is selling one trade to a non registered purchaser and is charging vat on the sale. Purchaser's turnover inclusive of new trade will be below vat threshold, Dilemmas. Should vat be charged on the sale? Does purchaser have to register for vat as vendor was vat registered (TOGC)? Can purchaser register for vat to reclaim the input vat and de-register asap.
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TOGC?
1. first question is - should the two businesses be one, or are they sufficiently distinct? Assuming they are properly separate...
2. If the business is not registered for VAT, he cannot charge VAT when selling it to another person. The value of the sale of the business is excluded from the registration threshold in any case.
3. The purchaser only needs to register for VAT if his total turnover, including the turnover of the business he is buying, takes him over the threshold.
4. But, if VAT is charged, he should not de-register immediately, since he would have to account for output tax under the deemed supply rules.