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what is the fine if I sell a company and do not deregister for vat

what is the fine if I sell a company and do not...

Dear all,

I would be very grateful as if someone can help to answer my question.

I will explain the whole story:

I had a ltd company, which I was using only to buy and sell things through the ebay. Then, my friend was selling Brazilian food from a major supplier in UK to shops.

He told me that it was a good business. Therefore I called a company in Brazil, which could be my supplier to do the same business.

So to be able to import from Brazil I needed to register for VAT, otherwise I could not import. 

So I decided to register for VAT, but due that it took so long that I lost the deal in Brazil, so I gave up the idea and decided to just continue with my online sales. 

But due that I was a VAT registered and my turnover was very small I would make no profit selling online if I had to pay VAT. So then, I registered another company in my name and decided to keep the old one open in the case that another deal to import appear.

Well after sometime I decided that I had no reason to keep the VAT registered company open and I commented to my neighbour, which is an accountant that I was thinking to shut down the VAT registered company as it was not needed anymore.

Then, he told me that it was no reason to shut it down. He had a client that was interested in buy it. I asked him if it was legal and he replied YES. Therefore I agreed on transfer the company to his client and we signed the whole paperwork and the company was legally transferred to his client.

When we signed the papaerwork I asked him if we need to do anything else, such as inform the companies house, HMRC, etc.

He said that it was all done and that I had nothing to worry about anymore. But it seems that he never informed the HMRC that the company had a new owner.

Well now is when my worries began.

One day a Higher Officer from HMRC was looking for me and therefore he found me.

He asked me about some alcohol import, warehouse, etc...

My answer to him was that I never deal with alcohol and that I did sold the company months before.

Therefore I provided all of the domentantion such as the companies house, agreements,  to prove that I had nothing to do regarding his issues.

After I provided the documentation, he never called me again and that was all.

The reason that I am still worried is that they still investigating the issues regarding to the VAT of the company that I sold due that they cannot contact or find the new owner.

Therefore I still receiving letters from the company that I sold and as well they still sending copy letters to other address that they believe they new owners are.

So now, another letter arrived again on my address asking to pay about £281.000 pounds for VAT transactions that the new owners have done.

Finally, my worries is that as the accountant that found the buyers never filled the VAT 68 form or the VAT 07 form when I transferred the company to the new owners.

As well it looks like a scam for me and that they did all of this in purpose.

Please can anyone advise me in what to do or if I need to do anything as the company is not mine and the letters is not arriving in my name and as well all of the transactions that they found was after I have sold the company.

Another question, do I get any fine for not have filed one of the above forms?

Kind regards and i hope anyone can reply to this question as I am not getting any sleep.


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20th Aug 2012 14:26

You didn't need either of those forms.

You've done nothing wrong. VAT registration relates to the legal entity involved, in this case a limited company registered with companies house under co reg number 123456 or whatever that is.

In selling the company you've transfered you shares in the company (assuming it was limited by shares) to another person.  A limited company under reg no 123456 still exists, is still able to be registered for VAT, and indeed is still registered for VAT. This is all perfectly normal and nothing that HMRC needs to be told about from a VAT point of view. They may need to know such things for self assessment and Capital gains, but from what you've said above there are no VAT problems for you.

The only thing you need to be sure of is that you registered the paperwork for the transfer of the company properly with companies house, i.e  your resignation as a director etc. If you've got the proper paperwork that shows that you've indeed transfered the company, then all you need to do is tell them to stop sending you letters as you have nothing to do with the company, and complain if they keep bombarding you with paperwork. If they're sending you letters asking for payment for a company that you have demonstrated you have no liability for then tell them you'll be putting a harrasment complaint in.

As long as you didn't trade illegally with the company and properly registered your resignation, then any liabilities lie with the company not you, that's the point of a limited liability company.

So there is no fine for not deregistering for VAT as long as you had an intention to trade or were trading whilst the company was registered. Even if you had technically ceased trading, a failiure to notify penalty is very rare and not overly high; it's £5 a day up to a maximum of 100 days, so at most a failiure to notify is £500, unless HMRC can demonstrate that you've knowingly become part of a fraud.

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to maxaca
20th Aug 2012 14:38



Thanks a lot for your anwers.


I am sorry about the question, but are you an accountant or someone which I can really rely on this information.



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20th Aug 2012 14:37

Thanks a lot for your anwers.


I am sorry about the question, but are you an accountant or someone which I can really rely on this information.



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20th Aug 2012 14:43


I know nothing about Spidersong's qualifications but based on his/her contribution history on this site, I'd say that his/her advice is perfectly reliable.

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20th Aug 2012 15:20

If it helps

I can also vouch for them, I know them from other sites as well and their advice has always been sound.

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21st Aug 2012 10:28

Knowing Me, Knowing You......AHA!

I'm not a qualified accountant, but I have received VAT Legal and Technical certification by HMRC, which is a qualification issued and recognised by both the Chartered Institute of Taxation and the Institute of Indirect Taxation.

This was issued during a decade and a half working for HMCE/HMRC. I was a technical officer (back when people actually got answers by writing to, visiting, or phoning the VAT office, (and under a boss who taught me that the best place to look for any answer was in the legislation rather than relying on the (sometimes badly worded and/or thought out) opinion put out by HMCE in their notices), a visiting officer, and perhaps more salient to the OP spent a couple of years managing a Deregistration unit covering a largish chunk of the country. During that time I only remember issuing 2, perhaps 3, failure to notify penalties, and threatened them on another 2 or three occasions. (Given my memory I might be slightly misestimating there but only slightly, I certainly wouldn't need to take my socks off to count the numbers we did)

Since then I've spent a number of years as indirect tax manager for an organisation with a finger in many pies (or many fingers in many pies, depending on how you use the phrase, either way it's a messy and unhygienic way to eat) dealing with tax througputs measured in the tens of millions, as well as occasional pro-bono help to some third sector groups. So whilst I wouldn't claim to be a VAT 'expert' (because I don't think such an animal really exists given the varying and sometimes contradictory rulings and opinions found throughout tribunals and appeals etc), I am a VAT specialist and I've been around the block a few times (although that could largely be the roadworks adding time to my daily journey at the moment).

Hope this, in concert with my previous advice, helps.

BTW; thanks for the votes of confidence BKD and CC (although now I'm curious as to what other alias you may use on 'other sites' CC)

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to lionofludesch
21st Aug 2012 13:55

Dear friend, I think your reply says everything.


thanks a lot for your time

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