Hope everyone is enjoying the weekend.
Recently, we had a takeaway client who was prompted by HMRC to disclose his turnover and it became apparent that he was trading over the VAT threshold and subsequently HMRC backdated the VAT by 12 months and imposed a penalty.
The owner/director then realised that being VAT registered, he cant be profitable, so he has decided to surrender his lease and stop trading. The surrender of the lease was a simple process since the freehold owner of the trading premise is his own father.
As such, with these businesses, there is always someone else who is happy to take over, so he managed to surrender the lease because he was able to get someone else to take it on, and his father is happy because rent is still coming in.
The problem is that the new company that has taken over have approached us to be their accountants as well; and we have told them that they need to register for VAT from day one - but they are arguing that the will wait till they exceed the threshold themselves, as they feel that they wont be as busy as the last incumbent as they will not be doing as much marketing as them. The name of the takeaway hasn't changed, and there was only a week in between where the business was closed.
What should I do from a professional point of view with respect to the new clients willingness to register for VAT straight away, or does he have a point?