A client of mine has changed from a limited company to a sole trader in October last year. Ltd Co. deregistered for VAT from November 2008. The company name has changed, but still doing the same type of work. The new company has been registered for VAT from February 2009. The Limited company had just one director, now the sole trader. He has just carried on using his vehicles/assets in his sole trader business.
No accounts have been produced for the limited company to date.
I have a VAT return to complete for the sole trader business for the period. Feb to end March.
My questions are:
What happens when he uses the same vans in his sole trader business?
In this first VAT return do I just include the normal output less input VAT, and can I include VAT before registration eg tools bought after limited company ceased but before VAT registered.
What about if he has used his Limited Company Bank Account for sole trader purchases? (new bank account now set up)
Please help me. Any further advise which would be helpful to me very much appreciated.
If the van is an asset of the sole trader business then VAT can be reclaimed on any motoring expenses, including fuel and repairs.
The normal rule would apply and your client would be able to claim pre-registration VAT on any goods and services (within the relevant time limits).
Any transactions included in the limited company bank account but relating to the sole trader business would need to be included in the sole trader accounts using the capital introduced/drawings account.
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