I have a client who is going from being SE to being a LTD Company.
He wants to move all the office fitting from the Self Employed business, over to the new company LTD. I take it he will need to value the fittings and transfer it over to the ltd comp accounts
The self employed business is vat registered already, and has been for a few years, so I take it as the new LTD company will be it's own entity so to speak the MD will need to decide whether to be vat registered or not, and that he has the right to be either vat registered or not?
He also want's to keep LTD comp t/a Name?? (self-employed business), but not have this one vat registered, can he do this?, as it was vat registered before, not sure if he can.
Thank you in advance for your replies!.
Lor
-- Edited by lor on Tuesday 9th of October 2012 12:32:52 PM
Yes needs to value and arms length the assets transferring and effectively sell them to the ltd co.
Sounds like is a TOGC. So relevant link to look at is http://www.hmrc.gov.uk/vat/start/register/takeovers.htm. If turnover of the sole trader is more than £77k in the last 12 months then needs to be VAT registered from date of transfer. Unless turnover in next 12 months is going to be below deregistration limit. What you cant do is start from a blank slate and say will register when turnover of the ltd company goes above £77k (otherwise peopler would be selling their businesses all the time to other companies and get £77k VAT free worth of sales each time).
He can trade through the limited company and call it whatever he wants (legalities aside) so no bar being called Joe Bloggs Ltd and tradding as Stewart Accounts (for example).
1)t/o from the sole trader is less than 77k, so that would mean that the Ltd company can be vat registered or not, as I take it as it is an entity in it's own right. 2)If the ltd is to be vat registered and then the ltd comp t/as ???, is not vat registered (assuming below the threshold for being vat registered, I take it this is still allowed?.
Point 2) seems to be the way the clients wishes to go forward.
1. If the turnover from the sole trader is less than £77k for last 12 months then the ltd company wouldnt need to be registered for VAT on TOGC as the turnover of the ltd co and the sole trader over over the last 12 months is less than £77k. Why is the sole trader registered for VAT if turnover not more than £77k. Is it above the dereg level of £75k or is it registered for commercial reasons?
2. Not sure what you mean by 2nd point.
Best to read the link i sent in detail or get your client to speak to their accountant. If you are their accountant (as opposed to bookkeeper) then you really should be able to advise them what to do.
I had these issues last year when i did the same for a client Lor.
The wanted to go Ltd from sole trader. Runs a scaffold business, so i set the new business up (soletrader) did the VAT registration, everything. She was happy, until 4 months later she decided she wanted to go limited... *sigh*... Ok I said and set the wheels in motion.
So a NEW company was set up and resgisterd by myself, a brand new Ltd Company with a slightly modified name and the inclusion of Ltd. at the end. This is when the problems started, UTR/PAYE/CIS etc could NOT be transfered between the sole and ltd. The ltd had to re-register EVERYTHING, the only thing that could be transfered was the VAT number, and that was a hassle in itself! The transfer eventually went through and we got confirmation of it 3-4 weeks later. Everything was completed as far as i knew, except when it came to doing the VAT return. It couldn't be done through the Ltd company gateway on HMRC, as the number 'belonged' to the sole (technically according to HMRC and the privaliges could not be moved) so the return HAD to be done through the sole's HMRC gateway.
If i were to do it all again I would just get a brand new EVERYTHING for the ltd company, and de-activate everything on the old sole account.
This client still runs both businesses, and the sole still holds all the vehicles and 'rents' them to the ltd company, so in your example Lor you could just 'rent' the office furniture to the new ltd company rather than transfering on the books, and when that usfull life has expired and need to get new stuff, then buy it in the usual way through the ltd company.
well, the client has decided to make the sole trade a ltd - vat registered as the t/o was over the threshold, therefore this should be pretty straight forward ish.
just confirming what he wishes to do with the sole trade?????????......
client wishes to have the Ltd company as vat registered due to the t/o level and also wants to have the "sole trader"T/as Ltd Company as non vat registered is this allowed????
This client still runs both businesses, and the sole still holds all the vehicles and 'rents' them to the ltd company, so in your example Lor you could just 'rent' the office furniture to the new ltd company rather than transfering on the books, and when that usfull life has expired and need to get new stuff, then buy it in the usual way through the ltd company.
this sounds like the easiest way to do this, thank you!.
client wishes to have the Ltd company as vat registered due to the t/o level and also wants to have the "sole trader"T/as Ltd Company as non vat registered is this allowed????
Not sure what you mean by this Lor.
Do you mean he wants to trade the sole AS a ltd? if thats the case then i would say no... :/
client wishes to have the Ltd company as vat registered due to the t/o level and also wants to have the "sole trader"T/as Ltd Company as non vat registered is this allowed????
Not sure what you mean by this Lor.
Do you mean he wants to trade the sole AS a ltd? if thats the case then i would say no... :/
If the businesses are GENUINELY totally seperate then yes in the same way as one can have multiple limited companies with some VAT registered and others not.
The key though is to convince HMRC that this is not simply a seperation of convenience.
Any sniff that they are somehow losing out and they'll override the legal form with how they see the reality.
For this sort of arrangement I would try to involve HMRC in agreeing the leegal form before going too far down the path as it's always better to have a bit of paper to wave at them to say "but you agreed that...".
kind regards,
Shaun.
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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.
If the sole trader business and the Ltd company business are working in the same or closely related trade they should both be VAT registered otherwise they would be classed as disaggregation and it would be up to the owner to prove that this was not the case.
