Under the VAT Act, businesses meeting certain turnover thresholds are required to register for VAT and charge it on applicable goods and services. However, circumstances change, and businesses may find themselves needing to deregister their VAT registration for various reasons.

Reasons for Deregistration

VAT deregistration may be necessary for several reasons, including:

1. Business Closure: If a business ceases its operations or undergoes liquidation, deregistration from VAT is necessary.
2. Revenue Thresholds: If a business’s turnover falls below the mandatory registration threshold, deregistration is required.
3. Change in Nature of Business: Significant changes in business operations, such as a shift from taxable to exempt supplies, may necessitate deregistration.
4. Change in Business Structure: Alterations in the legal structure of the business, such as mergers or demergers, could require VAT deregistration.
5. Transfer of Business: If a business is transferred as a going concern, VAT deregistration may be necessary for the seller.

Process of VAT Deregistration

The process of deregistering for VAT in South Africa involves several steps, to ensure compliance with SARS regulations:

1. Assessment of Eligibility: Determine whether your business meets the criteria for deregistration based on turnover, business activities, and other relevant factors.
2. Submission of Application: Complete the necessary forms for VAT deregistration and submit them to SARS. These forms can typically be found on the SARS website or obtained from a SARS branch office.
3. Documentation: Ensure all required documentation, such as financial statements and supporting evidence, is included with your application.
4. Final VAT Return: File a final VAT return, covering the period up to the deregistration date, and settle any outstanding VAT liabilities.
5. Await Confirmation: SARS will review your application and supporting documents before issuing a decision on your VAT deregistration request.
6. Notification of Deregistration: Upon approval, SARS will issue a notice confirming the cancellation of your VAT registration.

Important Considerations

During the VAT deregistration process, businesses should keep the following considerations in mind:

1. Timing: Plan the deregistration process carefully to avoid any disruption to business operations and ensure compliance with SARS timelines.
2. Tax Obligations: Even after deregistration, businesses may still have ongoing tax obligations, such as filing income tax returns or complying with other regulatory requirements.
3. Record Keeping: Maintain accurate records of the deregistration process, including correspondence with SARS and relevant financial documents, for future reference.
4. Consultation: If unsure about any aspect of the deregistration process, consider seeking professional advice from tax consultants or accountants with expertise in VAT matters.

VAT deregistration is a procedural step that businesses may encounter at various stages of their lifecycle. By understanding the reasons for deregistration, following the prescribed process, and adhering to SARS guidelines, can pose challenges. Contact Taxability today to assist with a smooth transition.