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sole trader exceeded the vat threshold

then converted to a limited company

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In May 2018, sole trader came to me and want to setup a Limited company.  I was under the impression my client was going to file tax return himself or get his accountant to file for 2017/18.

We setup a Limited company in July 2018 and company start trading under the limited company in August 2018.  Registered for VAT in July 2018 under Limited company

Now, my client contact me recently saying penalties are mounting up and he would like me to file his tax return.  Quoted a price then unfortunately it has taken me a while to put everything together due to missing receipts / costs and getting info from his previous accountant. 

For 2017-18 he exceeded the VAT threshold in February 2018 and therefore should have registered for VAT April 2018.  He was a sole trader for April 2018 - July 2018 and under rolling 12 months he would still exceeded the VAT threshold

He only had one client who was VAT registered under sole trader business and that has folded so there is no means of charging the client for VAT only.

Do you think we should write to HMRC and explain the situation with the month to month revenue figures.  I also noticed that in 2016 turnover was little higher than the VAT threshold but in 2017 turnover dropped.  Possibly he should have registered going back to 2016 but I think he maybe okay as that was probably a temporary blip..

 

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By SXGuy
17th Jul 2019 21:16

Well certainly you need to inform hmrc because as soon as you file his SA showing turnover way above the threshold they will of course jump on it themselves so best to get in first in my opinion. Obviously the clock resets from Aug 18.

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17th Jul 2019 21:46

You can give it a go for nothing.

I wouldn't be optimistic about your chances, though.

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18th Jul 2019 08:21

I’m not advising changing history or anything...

Someone will confirm/correct this, but - hypothetically - isn’t there something whereby if he’d become a partnership before he incorporated, then the 12 month turnover resets? As I write however, I think that his circumstances won’t benefit from this, pretty sure the 12 months doesn’t reset on transfer from sole trader to p/ship.

I’ll probably be corrected, but just wanted to add it into the thread ...

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By SXGuy
to atleastisoundknowledgable...
18th Jul 2019 10:30

I believe its only on incorporating that the clock resets, which would be from Aug 18.

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