VAT deregistration following TOGC - due within 30 days but late, is there likely to be a penalty?
My client, a sole trader, sold his business as a TOGC in December. He has held a VAT registration in his own name for many years and has operated two businesses through the same registration.
His plan was to deregister when he had finalised all the expenses for the business before the sale, on the basis that he was ceasing to make taxable supplies. I was finding the right form for him to complete when I noticed the fact that he should have notified compulsory deregistration within 30 days of the sale. The guidance states "You should be aware that if you fail to notify us of any changes affecting your registration details within 30 days of them occurring, you may become liable to a financial penalty"
It is now approx 70-80 days after the sale. When he completes the form it will trigger deregistration at the date of sale. He has already completed a VAT return to the end of January and expects to have no more expenses apart from my fees which I understand he would be able to reclaim via VAT 427 Claim for input tax relief from VAT on cancellation of registration.
The questions are
1. Is the client likely to be fined for late notification? If so, any idea how much?
2. What happens to the VAT return to end of January already completed if VAt deregistration is dated in December (all items on VAT return relate in some way to closing down the business and final payments in respect of expenses incurred before the end of trading)
3. What is the best way to handle this without me looking silly or the client getting into trouble? (I am not offically VAT agent as he has always done his own returns.)
Thank you for your help
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