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New Limited Company and VAT registration

New Limited Company and VAT registration threshold

Client runs a sole trader cleaning business turnover for last 12 months around 75,000 so approaching the VAT threshold.

The numbers also indicate trading as a limited company going forward would make sense.

If they set up a limited company for the cleaning business would the clock start ticking again from zero from the date of registration for the purposes of the VAT threshold?

Most of their clients are businesses who are VAT registered so once they do eventually register for VAT this should not cause any pricing issues. However they do also have some customers who are not VAT registered and the client has asked if the limited company was VAT registered and servicing most of his customers could he still service his non VAT registered clients via his sole trader business (which would not be VAT registered)? Or is the sort of thing that HMRC frown at?


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22nd Mar 2018 17:59

The clock won’t reset, the rolling 12 months will include their income as a sole trader.

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By mrme89
to atleastisoundknowledgable...
22nd Mar 2018 18:03

No it won’t.

As long as the business incorporates before the threshold is breached, the clock resets.

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to mrme89
22nd Mar 2018 18:08

Jeez, you’re right. I didn’t know that.
Evary dayz a skule day.

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By 356B
23rd Mar 2018 15:32

Yes the LTD starts from scratch.
Yes he can run the S/E trade as well as the LTD.

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to 356B
23rd Mar 2018 16:12

Beware artificial separation.

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By 356B
23rd Mar 2018 16:40

But HMRC won't claim disaggregation if one of the businesses is registered.

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23rd Mar 2018 17:05

HMRC may well claim disaggregation if one of the businesses is registered.
And, the clock does re-start from zero, where the business is transferred to a limited company, as long as the sole trader was not liable to be registered at that time.
(I wrote an explanation of this some time ago, which is somewhere on the AW site!)

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