Just taken on a new client, and have a mental block over the following :-
They were running as a sole trader, but incorporated as a Ltd Comp around Sept last year. They continued using the sole trader side until 31 March, so have only started putting things through the Ltd Comp from 1st April (Accountant is going to move the year end to 31 Mar, and process dormant Ltd accounts for Sep-March; then the year will run Apr-Mar.) Voluntarily VAT registered around Sep as well, and the first two returns have been posted as nil by the accountant.
I have been asked to do their Ltd Comp bookkeeping from 1st April, with the next VAT Return being Feb-Apr. So I have put all April data onto Sage One (their decision to use, not mine!) Now comes the bit I'm stumped on: They have some invoices regarding the set up of the Ltd company (moved to office unit Nov and fitted out, so furniture, desks, PC etc) which I assume I can put into the Ltd company and reclaim the VAT on (even if addressed to the sole trader? What about things like professional fees, stock and the like. Can that go in (claim VAT back) as well? Is there any other costs they could legitimately put through to claim VAT back on this return? What about stock held at end March, that is was then sold in April? These entries would effectively reduce their costs under the sole trader for the year ending Mar 16, and increase them in the Ltd company for April 16. Is that allowed? Sorry for all the questions - over thinking this one I think.....!!!
Mmm, first thought is to ask their Accountant for advice on this one to get their take on things,
But, if the Ltd Comp registered for VAT Sept last year, why then have they submitted two nil returns and yet from your post there are clearly purchases been made ?
Agree with Julie - you need guidance (in black and white!!) from the Accountant.
Seems to me the reason they have submitted two nil returns is to protect the so called dormant status of the company up to the end of March! Cake and eat it situation on the face of it!
__________________
Joanne
Winner of Bookkeeper of the Year 2015, 2016 & 2017
Thoughts are my own/not to be regarded as official advice,which should be sought from a suitably qualified Accountant.
You should check out answers with reference to the legal position
You and your client have stumbled into a current VAT hot potato!
Where the sole trader bears costs on behalf of the limited company, then the company can claim the input tax. But if the sole trader bears costs in its own name, then the input tax can only be claimed by the sole trader.
So, where the sole trader bought assets for its own business, then the company cannot claim the VAT. (I wonder if the sole trader was registered for VAT? If so, then the sole trader simply claims the VAT, and re-charges to the company.)
