Hi all, quick question, I have a client who is currently self employed and vat registered.
He has asked me if it would be acceptable for him to start a new separate Ltd company and use his self employed businesses vat number and login etc to complete his vat return, with out having a separate vat no. etc. for this new ltd comp. Is this allowable??.
Many Thanks
Lorraine
-- Edited by lor on Tuesday 20th of September 2011 03:02:23 PM
You cannot use a sole trader VAT number to submit Limited Company VAT Return as far as I'm aware.
My understanding is that your client would have to register the Ltd Co. from scratch. And if the sole trader entity was to cease, then he would have to close that VAT record down and de-register as such.
If the Sole Trader is to continue and the Ltd Co. is carrying out the same type of business, this may cause a few problems from an inland revenue perspective so worth looking into as well.
Also bear in mind that if the Ltd Co. is to take over the Sole Trader business, there could be issues when transferring assets etc... so might be worth looking into it. Something to do with the Capital Allowances. Could be more issues so best to seek professional advice.
Ltd co is a separate legal entity from him as an individual/sole-trader/self-employed person, which is why you can't share VAT numbers, as Kris says. If your client wants the ltd co to be VAT registered, they will have to register for VAT. However, if your client is planning to transfer the sole-trade to the ltd company, they could look at transferring the VAT registration to the ltd co. See here: http://www.hmrc.gov.uk/vat/start/register/takeovers.htm
The Sole Trade co and ltd - are two separate business ie cleaning and filtering of cooking oil in kitchen's. So what I gather he could still keep the sole trade business and set up the ltd comp completely separately with it's own vat no etc.
Ok, so then he will need to keep them as both separate sole trader co or 2 ltd companies, is this correct. If he choses both as sole trade he can use that one vat no. If he was to decide to go as 2 ltd then would would he just need one vat no but a new one.
Examples: 1 keep the orig s/e comp and start the new comp as se, will be able to use the vat number for the orig se comp for both the orig comp and the new se company
Example 2: Orig company to be made ltd and also the new company set up as a new ltd company, close down the orig se comp and then will need to set up for vat with a brand new vat no and log-ins.
Have I got this now?.
Hind Sight----------think this is incorrect-------see below!!!!!
-- Edited by lor on Tuesday 20th of September 2011 04:42:32 PM
-- Edited by lor on Tuesday 20th of September 2011 04:46:52 PM
If he chooses to do both as a sole trader that is different, it is the person who is the taxable entity, therefore it doesn't matter how many different markets you trade in if you are VAT registered as an individual you must charge VAT for all your trades.
But he can have a sole trader and a ltd company, or 2 limited companies. If both ltd companies are VAT registered, he'd need 2 numbers.
If he chooses to do both as a sole trader that is different, it is the person who is the taxable entity, therefore it doesn't matter how many different markets you trade in if you are VAT registered as an individual you must charge VAT for all your trades.
But he can have a sole trader and a ltd company, or 2 limited companies. If both ltd companies are VAT registered, he'd need 2 numbers.
Kris
ok as many se comps as he likes under one no (vat) and he can have a ltd comp and a se, but the main point is each ltd has to have a separate vat no
So if he wants he can keep his se comp and start a separate ltd but will need a separate ltd comp vat no. He has said so far he wants to keep the orig se comp and start a new ltd comp.
I think that by even asking the question your client is showing that he is slightly confussed about what the limited company actually is.
It's an entity that exists in its own right and as a director he has the same responsibility for the company as a parent does for a child.
Continuing with the anology of the company being an entity with rights, think of the question about the VAT number in the same way as one person wanting to use someone elses N.I. number and you're thinking on the right lines.
The number is unique to the company and the company is a totally seperate legal entity to the owners and any other business interests that the owners may have.
Good luck with trying to make this client keep the two businesses totally seperate.
kind regards,
Shaun.
__________________
Shaun
Responses are not meant as a substitute for professional advice. Answers are intended as outline only the advice of a qualified professional with access to all relevant information should be sought before acting on any response given.
Thanks Shamus and everyone's input, I'm not entirely sure why this client wants to become Ltd, as I believe the new company will be low t/o at least to begin with. He has now said that he wants to keep the se business as it is. Start new ltd company and have this non-vat registered. I think he would be best having just 2 separate se businesses.
My next thought is he would be able to have his se company as it is and also start the new ltd company non-vat reg as it is under the threshold (and is an separate legal entity). Think this thread hasn't finished yet!, get there in the end!.
-- Edited by lor on Wednesday 21st of September 2011 09:16:29 AM
Just to keep you updated, he has decide to go with having 2 separate se businesses. One more qu, he has asked that if his current business makes 10k profit for example and the new business makes 10k loss then the net profit would be 0, this is what I think it would be, then would he not have to pay tax on this at all, or would they want tax on the 10k profit? and then carry the loss of 10k on to the next tax year. Sorry this is my first client that has asked this and unsure of the answer.
-- Edited by lor on Thursday 22nd of September 2011 12:23:03 PM
offsetting wouldn't be available if one or both of the businesses was incorporated except for quite specific circumstances where both are incorporated and the limited companies are part of the same group... You really don't want to start getting into group accounts though! That's definite chartered / chartered certified accountants territory.
All the best,
Shaun.
P.S. Anyone else reading this please note that Lor is MAAT MIP which is an accountant level qualification (hear the grinding of so many accountants teeth out there!). For others it would be very unwise to offer advice to clients in relation to business structure and tax planning as this is almost certainly to be beyond the competence level for which your PII would cover you.
__________________
Shaun
Responses are not meant as a substitute for professional advice. Answers are intended as outline only the advice of a qualified professional with access to all relevant information should be sought before acting on any response given.
P.S. Anyone else reading this please note that Lor is MAAT MIP which is an accountant level qualification (hear the grinding of so many accountants teeth out there!). For others it would be very unwise to offer advice to clients in relation to business structure and tax planning as this is almost certainly to be beyond the competence level for which your PII would cover you.
P.S. Anyone else reading this please note that Lor is MAAT MIP which is an accountant level qualification (hear the grinding of so many accountants teeth out there!). For others it would be very unwise to offer advice to clients in relation to business structure and tax planning as this is almost certainly to be beyond the competence level for which your PII would cover you.
Thanks Shamus, even though I'm MAAT MIP I still have questions and get stuck. I always say that you aren't born a bookkeeper/accountant therefore you learn as your experience grows.
Also very thankful for everyone's input in this thread! x. This forum is a godsend especially for people working alone!.
Think this thread hasn't finished yet!, get there in the end!.
