I have a new client who was a sole trader in one business and has now taken over a new business which I have set up a limited company for him to do so.
He has sold stock and a vehicle from his sole trader business to the limited company business. The new business has nothing to do with his sole trader business as it is in a different town and not connected except for it having trading similarities.
Right away there is a vat enquiry!
Firstly vat inspector is saying the business he took over should have been treated as TOGC and no vat should have changed hands in the stock he took over from the previous owners. Fair comment there.
However, the vehicle he used in his sole trader business is a 7 seater similar to a mini bus he apparently used for transporting his clients. He had originally claimed the vat on this vehicle as he bought it totally for business use. He also has his own car which he uses privately. When he sold the car to the limited company he charged the limited company vat and declared and paid the vat on his sole trader business. VAT inspector is disallowing the car to the limited company because he has not changed the log book and also because his insurance says business and private use on it. Accordingly the vat inspector says there is no way this can now be changed to the business name? Are there any legitimate ways to be able to add this vehicle as the company vehicle and claim the vat?
Also, is it possible for a vat inspector to request documentation from both businesses when only one of them is under enquiry?
If this is an insight as to how this client is going to attract problems I am of the opinion I should maybe bow out gracefully........obviously his previous accountant was having issues with him too as I have not had a response to my letter.
