A. A change of trading entity is considered to be a transfer of a going concern and as such Section 49 VATA 1994 provides that the turnover of the transferor should be treated as that of the transferee in determining whether the transferee is liable to be registered. But, this is only the case where the transferor is a taxable person.
A taxable person is someone who is either already VAT registered or liable to be registered. So the question here is whether someone who has exceeded the limit but is still within the 30-day notification period is a taxable person.
Schedule 1 paragraph 1(1) (VATA 1994) states:
“….a person who makes taxable supplies but is not registered under this Act becomes liable to be registered under this Schedule-
- at the end of any month, if the person is UK-established and the value of his taxable supplies in the period of one year then ending has exceeded £85,000.”
This is reiterated in HMRC’s manual VATREG29300 ;
“ if the transferor’s relevant turnover in the year to the date of transfer had exceeded the registration threshold, the transferee would have a liability to register on the day of the TOGC.”
As such we would consider the client partnership to be a taxable person at the end of March 2018 and therefore the new company would be required to be registered from the day it takes over the business. This would mean that the compulsory registration date for the company would actually be earlier than the registration date would have been for the partnership.