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VAT cash accounting and transfer of business

VAT cash accounting and transfer of business

Good morning
I have a sole trader wishing to incorporate their business. They operate VAT cash accounting. If they choose to register the Ltd Co under a new VAT number, do they have to keep their sole trader's registration for a few months until all input /output VAT is accounted for?
Assume they incorporate and register for VAT on 1st April do they then have to submit 2 VAT returns for another quarter (maybe 2)? Does this affect the date of cessation for the sole trader?
Is it simpler to keep the same VAT number (transferring VAT history of the sole trader)?


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07th Mar 2016 14:11

TOGC & Cash Accounting

Several questions in one!

Where a cash accounting businesses deregisters, all outstanding output tax and input tax has to be brought to account within 2 months of cessation. That might create a cash flow problem; this would be avoided if the limited company retained the sole trader's VRN.

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07th Mar 2016 14:24

Thank you for your answer.
Just to clarify does it mean they have to complete a normal return to be filed within 2 months? Or do they write separately to HMRC with payment? Client may decide to keep his VAT number if it is indeed too complex to start anew.

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08th Mar 2016 14:59

Deregistration for cash accounting

The two months limit applies to the final VAT Return. PN 731 does contain this information.

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07th Mar 2016 19:28

For future reference
VAT notice 731 explains it all!

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