Can I buy a VAT registered shelf company?
There are a number of reasons for buying a shelf company that is already VAT registered.
1) SARS makes it extremely difficult to register a company for VAT. Only professionals like ourselves find it relatively straightforward, but even so, a lot of paperwork has to be provided by the client.
2) If you are buying a commercial property, you simply must be registered for VAT in order to buy it as a going concern and have the transaction zero rated. Otherwise, you will have to pay the VAT and then claim it back and wait, and wait ……. for your refund.
3) If you are importing, you will pay VAT at the port of entry and need to be registered in order to claim it back. Of course, you’ll also need an import/export license and that can take a few weeks. We normally stock at least one VAT registered company already with an import/export license.
4) If you are exporting, you will want to claim the input VAT on your purchases and zero rate the exported supplies. Again, you’ll need an import/export license.
Never buy a company that has traded. You don’t know what you are getting. It could have all sorts of liabilities or contingent liabilities and it could be years before calamity strikes!