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HP - new company

My client is forming a Ltd Co through which he will operate a kitchen business.

He has already taken out an HP agreement in a Van which is in his name.  Its unlikely they would transfer this into the company name given its a start up.

What can he do to be able to reclaim the VAT?



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26th Apr 2012 23:10

sole trader

I would suggest that he trades initially as a sole trader and registers for VAT and then reclaims the VAT on the van. When, and only when he starts making profits - say £15k or more should he trade as a limited company. There may well be a loss in the first year, particularly when AIA is claimed and that loss may well be available to reclaim tax personally paid in the last three years and give a cash boost to the new business.

There might be a problem if he incorporates and there is still HP owed as the ownership of the van cannot be moved to the company, unless the HP is refinanced through the company. If this is not done when he incorporates I think VAT on the van may have to be repaid on its value on incorporation, but not sure about this.



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