Transfer Assets from a Sole Trader to Ltd Co

How to transfer fixed Assets (Van) from sole trader to Ltd company

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A client has recently changed from being a sole trader to a Ltd company. They have a van which was purchased on HP and wish to transfer it to the Ltd co. The Ltd co would then be responsible for the HP payments. What is the best way to do this, an inter company transfer or is there a better way?? 

many thanks

 

Replies (23)

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By David Ex
30th Mar 2024 12:05

Prkcarole-AT-aol.com wrote:

They have a van which was purchased on HP and wish to transfer it to the Ltd co. The Ltd co would then be responsible for the HP payments.

Has this been agreed with the HP provider?

Thanks (5)
Replying to David Ex:
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By DKB-Sheffield
30th Mar 2024 12:44

David Ex wrote:

Has this been agreed with the HP provider?

Quite!

Before even considering the transfer of assets, liabilities, and the potential tax considerations... knowing what is possible under the terms of the agreement should be the first consideration. It may be that transferring with the HP in place is impossible, or that the costs of so-doing outweigh any benefits.

Incidentally, your client may wish to consider the terms of the existing agreement. Does the current agreement allow use by an employee of the third-party company? Same with insurance - is use in connection with a third party business permitted? In both cases, I assume drivers are the same, and line of business is the same but, there will likely be restrictions on use in one, or both, of the agreements.

As for the que...

ASSET - it may be be possible to transfer the asset for tax purposes at TWDV with election (assume s. 266). The transfer in the accounts is at MV.

LIAB - will relate to the HP agreement between provider and NewCo. This may differ from the balance o/s in the closing B/S of the S/T with the potential discharge of liabilities to the company incurring additional fees - possibly being consolidated into new agreement (the new liability may not all be related to 'company cost' e.g. exit penalties).

I am assuming VAT has been considered. Not part of the question, but due consideration should be given to TOGC (assuming TOGC relevant). If not TOGC, further considerations regarding VAT on the asset transfer may be relevant! Indeed, if not VAT registered - does the sale (of tge business and assets) trigger a requirement to register?

Lots of unknowns, and I've taken many a tangential detour but, as simply stated by David Ex... can the asset be transferred (is the first question).

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By Ruddles
30th Mar 2024 12:19

How do you have an intercompany transfer between individual and company?

HP considerations aside, the answer to this question is clearly “it depends”. General public can be forgiven for not knowing better, but I continue to be dumbfounded by the number of advisers asking questions without supplying anything like the relevant information required for a meaningful answer.

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Replying to Ruddles:
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By FactChecker
30th Mar 2024 12:40

Whilst agreeing (emphatically), it may be that this particular OP is not exactly over-active in the provision of any advice (based on this being the only question asked - and no comments made - in the decade since becoming a member)?

Although not a direct correlation, I do sometimes wonder how many are out there not so much actually practising (with or without a PC) but randomly/occasionally proffering a snippet here and a morsel there? I bet HMRC don't know the number!

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Replying to FactChecker:
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By I'msorryIhaven'taclue
30th Mar 2024 13:36

I know of a few bookkeepers who hold themselves out to the public without AML supervision. I guess the AML distinction between employment and self-employment hasn't quite registered with them.

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Replying to I'msorryIhaven'taclue:
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By Paul Crowley
30th Mar 2024 14:08

I suspect that is quite common.
Use their client's gateways, so no HMRC agent registration happens
Noticed it a few times when new 'agent' submits an ITR. We are not displaced and can read the tax return.

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By [email protected]
31st Mar 2024 06:59

Wow - what a site this is, I posted on here as a newbie to Ltd companies to ask for some constructive advice but I guess you never needed help by the comments received. So just so you know Paul Crowley - I have my own agents gateway identifier, never use the clients and what that has to do with the question posted - I have no idea. To 'I'm sorry I haven't a clue' - I'm supervised by the ICB for AML
Fast Checker, I can't remember posting on here before but I'll stick to the Bookkeeepers forum in future, they are a lot friendlier and more helpful,
One thing I did notice is no-one apart from DKB Sheffield gave an answer or anything constructive. So thanks 'gentlemen' hope you have a good day

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Replying to [email protected]:
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By Cylhia66
31st Mar 2024 09:23

You admit that you are a newbie to Limited Companies, which everyone has guessed from the confusion contained in your question. The non so helpful answers you received are probably more helpful than you think. It's too early for you to advise Limited Company clients, clearly. You need to brush up on a few things first. That's good advice for you, not unhelpful advice. If you get that one simple question this wrong, you're on for making many considerable mistakes. And this will cost both your clients and your business. Have you done any accounting studies? Would it be sensible to make this your starting point?

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Replying to [email protected]:
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By Leywood
31st Mar 2024 09:47

So You think Davids initial comment wasn’t pertinent? Wow.

You’ve really not learnt anything at all from the helpful comments have you, given your posting later on the same day on the forum you’ve mentioned.
https://www.bookkeepers.org.uk/Forum/?type=&cid=0&tid=95002&lp=0&page=1&...

Given you mention in there that you are a bookkeeper, you really should stick to bookkeeping and not advise nor get involved in something that you clearly don’t have the skills to deal with. What else do you not know about such a transfer.

You shouldn’t be using your client as a Guinea pig to learn your job.

Do ICB not cover ethics? Ones which state you shouldn’t take work on outside your knowledge and skill set?

Maybe as part of hmrc plans for the profession they should be looking at what work the professional bodies seem to allow their members to do when not qualified as opposed to just bashing QBEs.

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Replying to Leywood:
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By I'msorryIhaven'taclue
31st Mar 2024 10:28

Leywood wrote:

You’ve really not learnt anything at all from the helpful comments have you, given your posting later on the same day on the forum you’ve mentioned.
https://www.bookkeepers.org.uk/Forum/?type=&cid=0&tid=95002&lp=0&page=1&...

"I've asked this question on the accounting web forum and my goodness what a superscillious self appreciating lot they are."

How sharper than a serpent's tooth it is to have a thankless child!

Leywood wrote:

Maybe as part of hmrc plans for the profession they should be looking at what work the professional bodies seem to allow their members to do when not qualified as opposed to just bashing QBEs.

I took a gander at the ICB website, and it seems they offer membership and practising certificates based on "prior experience". They've found a gap in the market by offering temporary AML coverage whilst a membership application is being processed (which, I imagine, would be a godsend to anyone with HMRC AML whose renewal is held up.

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Replying to [email protected]:
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By I'msorryIhaven'taclue
31st Mar 2024 10:12

Prkcarole-AT-aol.com wrote:

Wow - what a site this is, I posted on here as a newbie to Ltd companies to ask for some constructive advice but I guess you never needed help by the comments received.

You've had plenty of help:

David Ex flagged the legalities of transferring a HP agreement from one legal personage to another;

DKB explained the mechanics of any transfer, and hoisted a red flag over VAT;

Ruddles has highlighted the dearth of information in your question which prevents any definitive answer;

and

Cylhia has instructed you on how to frame a question and read between the lines in the answers.

Prkcarole-AT-aol.com wrote:

So just so you know Paul Crowley - I have my own agents gateway identifier, never use the clients and what that has to do with the question posted - I have no idea..

Paul wasn't alluding to you, Carole. He was responding indirectly to Factchecker's general observations.

Prkcarole-AT-aol.com wrote:

To 'I'm sorry I haven't a clue' - I'm supervised by the ICB for AML

I'll plead non est factum as I neither stated nor implied that you weren't. I too was responding to Factchecker's general observations, while we waited for you to return with the facts of the case

Prkcarole-AT-aol.com wrote:

Fast Checker, I can't remember posting on here before but I'll stick to the Bookkeeepers forum in future, they are a lot friendlier and more helpful

Will the bookkeepers' forum know the answers?

Prkcarole-AT-aol.com wrote:

One thing I did notice is no-one apart from DKB Sheffield gave an answer or anything constructive. So thanks 'gentlemen' hope you have a good day

Ouch! Bye bye, Karen

Thanks (3)
Replying to I'msorryIhaven'taclue:
By Ruddles
31st Mar 2024 11:15

Not only did Karen (sic) fail to provide enough information in her question here she has diluted the usefulness even further in that other place, referring only vaguely to “finance” rather than HP.

GIGO.

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Replying to Ruddles:
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By I'msorryIhaven'taclue
31st Mar 2024 11:51

She also failed to mention her setting is Scotland.

Are there different HP legalities north of the border? I vaguely recall Scotland has different terminology ("hired" rather than "bailed") and can imagine there may be procedural differences in transferring a HP liability.

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Replying to I'msorryIhaven'taclue:
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By [email protected]
31st Mar 2024 13:58

Your right, I'm sorry I haven't a clue, you don't have clue. My setting is not Scotland, I am not Scottish nor am I a Glaswegian and I find your comments regarding them offensive.

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Replying to [email protected]:
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By I'msorryIhaven'taclue
31st Mar 2024 14:26

My apologies Carole, you have a namesake in Scotland. My bad. I see from the information you've elected to display on the ICB's website that you're a Yorkshire lass.

Moot point, but Scotland does have slightly different laws and I'm mightily sorry if that offends you.

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Replying to I'msorryIhaven'taclue:
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By [email protected]
31st Mar 2024 14:42

So MrI'msorryIhaven'taclue your wrong again. I'm a Geordie, born and bred and proud of it, I just now live in Yorkshire and its not Scotland's different laws that offend me, its your derogatory remarks towards them, Glaswegians in particular

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Replying to [email protected]:
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By I'msorryIhaven'taclue
01st Apr 2024 11:07

Prkcarole-AT-aol.com wrote:

.. its not Scotland's different laws that offend me, its your derogatory remarks towards them..

I've said nothing derogatory about Scotland's different laws!

Has anybody replied on your ICB forum yet? The answer's 45p mile, and a stencil set to add the word 'limited' to his trading name on both sides of the van ;)

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Replying to [email protected]:
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By Paul Crowley
01st Apr 2024 14:09

' its your derogatory remarks towards them, Glaswegians in particular'

Trying to read between the lines? You saw nothing and invented an opinion of your own.

The HP liability is not transferable.
If you owe me money, you cannot declare that a limited liability company (that could go bust tomorrow) now owes it and walk away from the problem.

If you are going to advise companies, you really need to understand the rules before advising, not learn from mistakes made whilst practicing.

On all threads, contributors talk to and respond to each other. The question stands for all eternity, and questioners are asked to search prior questions to avoid the same question being asked repeatedly.

All questions are seen as a common resource for the benefit of all. They are not solely for the benefit of the person posting the question

Thanks (4)
Replying to [email protected]:
RLI
By lionofludesch
31st Mar 2024 11:17

Prkcarole-AT-aol.com wrote:

Wow - what a site this is, I posted on here as a newbie to Ltd companies to ask for some constructive advice but I guess you never needed help by the comments received. So just so you know Paul Crowley - I have my own agents gateway identifier, never use the clients and what that has to do with the question posted - I have no idea. To 'I'm sorry I haven't a clue' - I'm supervised by the ICB for AML
Fast Checker, I can't remember posting on here before but I'll stick to the Bookkeeepers forum in future, they are a lot friendlier and more helpful,
One thing I did notice is no-one apart from DKB Sheffield gave an answer or anything constructive. So thanks 'gentlemen' hope you have a good day

So, anyway, now you've had your rant, has the HP provider agreed to transfer the contract to the company?

If no, what you're proposing can't be done so the question of bookkeeping entries doesn't arise.

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Replying to lionofludesch:
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By [email protected]
31st Mar 2024 13:55

Thank you Lionofindesch for your reply, now I have a starting point. Only found out about the client transferring the HP payment from sole trader to Ltd Co on Friday, They still have the sole trader operational. Sorry for the rant but after having checked on here before and found that a lot of 'Accountants' can't agree on the correct way to treat this I thought I would ask the question again and see what replies I received. Wasn't quite prepared for some of them. Just for the record, I am registered with the ICB as a qualified Bookkeeper, did my training with them, sat and passed the exams with them.
I'll now close this down so please people, don't bother posting any more comments.

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RLI
By lionofludesch
31st Mar 2024 07:48

Another satisfied customer.

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Replying to lionofludesch:
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By I'msorryIhaven'taclue
31st Mar 2024 10:38

Heh heh, probably Glaswegian!

I vote the answer is 45. Pence, that is. Per mile.

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Replying to I'msorryIhaven'taclue:
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By Paul Crowley
01st Apr 2024 13:49

That was definitely a whoosh.

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