- This does not apply to the sale of most residential properties.
- This applies only where
- the seller and purchaser are both registered VAT vendors;
- the property is or is part of a VAT registered enterprise, such as a commercial rental enterprise or farm or the property is part of a larger business being sold;
- very specific requirements are met by SARS. Guidelines can be found on he SARS website and are set out in http://www.sars.gov.za/AllDocs/LegalDoclib/Notes/LAPD-IntR-IN-2012-57 – Sale Enterprise Part Going Concern.pdf
- It is tempting to agree to sell properties as going concern sales, as VAT is payable by the seller, though at zero percent, which means no transfer duty is payable by the buyer, but it is not always appropriate and correct;
- This format of sale is useful and convenient where the circumstances are correct, but dangerous and potentially costly where they are not. SARS may query the zero rating later and levy VAT on the seller, as well as penalties and interest.
- SARS requires that the agreement contains very specific language around the sale as a going concern. If the contract does not have these clauses, the going concern sale will be rejected either before or after transfer and SARS may seek to collect VAT, penalties and interest.
- Seek legal and tax advice on these sales.
