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17 January 2017
Issue: 4583 / Categories: Forum & Feedback

Can a hairdressing salon deregister from VAT after a sale of part of its business?

A VAT-registered client trades as a women’s hairdressing salon and men’s barbers shop. The businesses are on the same premises but different floors. The annual VAT exclusive turnover of each part of the business is £75 000 £150 000 in total.

An employee has agreed to buy the barbers for £10 000 goodwill plus £5 000 fixtures and fittings. As I understand it he will not need to register for VAT because the turnover is less than £81 000. Is this correct? Presumably my client must charge VAT on the £15 000 sale proceeds because it will not qualify as a transfer of a going concern if the buyer is not VAT-registered?

Finally if the remaining part of my client’s business (the salon) has expected sales of £75 000 excluding VAT in the next 12 months can she deregister as soon as the barbers business...

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