simple VAT question

simple VAT question

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non- VAT registered sole trader below threshold incorporates - in ascertaining turnover for VAT registration purposes do you look back 12 months including the sole trade turnover?

Replies (9)

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Quack
By Constantly Confused
20th May 2015 12:43

No

I stand to be corrected, but on incorporation you get a fresh start for VAT turnover purposes.

Thanks (1)
By mrme89
20th May 2015 12:49

If it's a TOGC the new company will inherit the taxable turnover of the sole trader business.

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PJ
By paulgrca.net
20th May 2015 12:50

Wrong

The answer is yes

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By Steve Kesby
20th May 2015 12:58

No

For the transferor's supplies to count towards the transferee's registration limit, following a TOGC, the transferor needs to have been VAT registered.

See VATREG29250.

Thanks (2)
ghm
By TaxTeddy
20th May 2015 13:19

Yes, no, yes, no?

Seems the O/P was wrong - there's no such thing as a simple VAT question

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By User deleted
20th May 2015 13:30

No

.

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By Michael C Feltham
20th May 2015 13:32

Simple? Perhaps!

"non- VAT registered sole trader below threshold incorporates - in ascertaining turnover for VAT registration purposes do you look back 12 months including the sole trade turnover?"

Has the previous entity been transferred, lock stock and barrel? If yes, then as already pointed out it falls, under VATA as: "A transfer of a Going Concern".

Ergo, the Ltd Co has acquired the obligations, debts and responsibilities of the previous entity.

Alternatively the new Ltd Co, could structure the acquisition where it purchases specified items: customer base; stock; whatever, free of any attendant liabilities and obligations.

In which case then it would be New Start and VAT would run from the date the VAT number was issued.

However; there may be good cause for NewCo to claw back significant Input VAT on stock, capital items etc purchased up to Six Months before registration.

All down to a Quick and Dirty Cost/Benefit Analysis.

 

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By spidersong
20th May 2015 15:19

It's deja vu all over again

See:

https://www.accountingweb.co.uk/anyanswers/question/vat-registration-23 

or

https://www.accountingweb.co.uk/blog-post/togc-and-vat-registration

As pointed out there VAT law places relevance upon different legal entities, a sole prop and a ltd co are different legal entities. Different entities are only required to include a previous entities turnover if S49 of the VAT Act applies, S49 only applies where a taxable person transfers their business and S3 (1) of the VAT Act defines a taxable person as someone who is, or is required to be, registered for VAT.

The sole prop has no requirement to register at the point of transfer, he is not a therefore a 'taxable person' so the ltd company has no need to include his taxable turnover when calculating their taxable turnover for registration purposes.

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By nick farrow
20th May 2015 16:47

many thanks all - I tried to thank Steve K earlier but my post got lost

the s/t was not nor required to be VAT reg as below threshold (as stated)

 

 

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