VAT realms!

ademoore Registered Posts: 146 🎆 🐘 🎆
I have a client just finished first year accounts.

He had some business income a few weeks prior to Ltd company being set up, around £6.5k worth. Was intending to add this, along with pre-trading expenses, into the first year accounts.

His first 12 months trading came in at £65k, which is fine for VAT thresholds, however, when I add the £6.5k prior income, as intending, this then takes them over the limit for VAT and since a one-off situation, I have told the client we should apply for an exception for registration from VAT. The second year will not come above £65k.

There's a couple of options -
1. Apply for the exception and hope it is granted or,
2. Add the £6.5k and if called for vat registration, then be honest and say the £6.5k was outside the 12months zone, and added in to cover all income (about 13 months)

What would you guys do?


  • ademoore
    ademoore Registered Posts: 146 🎆 🐘 🎆
    By the way, this is for last year, so VAT threshold was about 70k, and the 6.5k addition put him at 71.5k
  • Monsoon
    Monsoon FMAAT, AAT Licensed Accountant Posts: 4,071 🎆 🐘 🎆
    Strictly speaking if the company didn't exist when the £6.5k was carried out, then it's not its turnover, and needs to be declared as self employment income. I don't think VAT is the issue here.
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