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bigduckontax, Accountant
Category: Tax
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If an opt to tax application was made by only one partner

Customer Question

If an opt to tax application was made by only one partner on a business and then the partnership is dissolved 9 years later, is the other partner still liable to pay the VAT if the business is then sold on or does that not then still stand ??
Submitted: 2 years ago.
Category: Tax
Expert:  bigduckontax replied 2 years ago.
Hello, I am Keith, one of the experts on Just Answer, and happy to be able to assist you with your question. has a very good summary of the position [by 'band' they mean the partnership]: 'In which case VAT registration is required once the income to the band has reached the VAT registration threshold. The status of the band as a VAT registered entity will not mean that the individual members become VAT registered in their own right. As a profit share from a partnership is not seen as a supply for the purposes of VAT, the individual members will actually be able to earn more money, before becoming registered for VAT,' So you see a situation can develop where the enterprise itself is registered, but individual partners not so if their incomes are below the turnover threshold, currently 82K. From the tenor of your question it would appear that the trading organization has been registered so on the dissolution of the partnership and your continuance with the business single handed then you would have to continue to account for VAT and charge it on your invoices where appropriate. If the turnover falls below the limit you could, of course, deregister and thus avoid all the palaver of VAT accounting. I do hope my reply has been of assistance and shed some light on the position.