Sole Trader Incorporating to Ltd Co

Sole Trader Incorporating to Ltd Co

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I have a new client that was a sole trader and incorporated into a ltd company, and wants us to take over their ltd company accounts and business tax return.

They incorporated March 2022 and was a photography business with assets of £10k original cost (all photography equipment). The market value now arguably a little under that £10k. They still use this equipment but have not 'transferred' to the ltd company.

Do the assets have to be transferred to the ltd company or can they continue to use them personally?

Assuming if we did transfer the assets we would DR assets on balance sheet and CR the DLA, allowing them to draw down the market value of assets over time tax free while also claiming AIA on the market value assets?

Would we have to submit any forms to HMRC? Client is about to declare to HMRC that their sole trader photography business has ended. As they are not gaining anything personally on the sale of assets assuming they do not have to declare anything on the capital gains section of their return?

Goodwill - would it be worth coming up with a reliable goodwill figure and including this? what implications would this have on his sole trader tax return?


Thanks in advance!

Replies (2)

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By Leywood
13th Jan 2023 13:40

It appears that you dont have sufficient knowledge to undertake this type of work from several of the comments you have made and indeed the tags.

Who is doing his self assessment?

Did he claim capital allowances on said kit in the first instance?

I would suggest you let someone else do this for you.

Thanks (1)
By lionofludesch
13th Jan 2023 13:51

If the fella claimed 100% capital allowances on this stuff and he doesn't transfer it to the company and it's got a value of £10000 (ish) he may need to include a balancing charge of £10000 (ish) on his final self employed accounts. Did he do that ?

If not, still time left to correct the position.

As Leywood says, if you don't feel confident, maybe consider whether to pass on this job.

Nothing to do with Capital Gains Tax here.

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