VAT Issue

T.C.

My client bought a van for work approximately 3 years ago. Now I find out that it has been transferred to her husband's business (the log book anyway). She reclaimed VAT and has been claiming capital allowances. I know she is honest enough, but his is one of those who tries to 'get one over' on the tax man. I have told her that we need to put this straight and that we have to show a sale of the van. I know he is going to put her off the idea as it will mean she has to charge VAT on the sale and pay this to the VAT man.
My question: If she does nothing, what should I do? Report it???:001_unsure:

jamesm96

T.C. wrote: »

My client bought a van for work approximately 3 years ago. Now I find out that it has been transferred to her husband's business (the log book anyway). She reclaimed VAT and has been claiming capital allowances.

Hi T.C.

Forgive me, but I'm a little unclear on what you mean here. Are you saying that she (through her non-VAT registered business) bought the van and then transferred it to her husband's VAT registered business, and re-claimed the VAT?

If I've understood right, then isn't the issue really that her husband's business reclaimed VAT that it hadn't been charged? (i.e. on the sale from her to him).

Sorry if I've not got that straight.

Mike.

T.C.

Sorry. I will explain. She bought the van and reclaimed the VAT through her business. The van has been transferred to husband's business with no accounting for the VAT or anything else.

jamesm96

Oh, I see! And, is her husband's business VAT registered? Presumably not, in which case I can see your ethical issue! If you don't prepare the VAT returns, then my personal view (which I'm sure won't be shared by everyone) would be that you should put something in writing saying that 'in the course of your work you've become aware that...' etc, tell them what the law says they should do about it, and leave it with them.

T.C.

I DO prepare the VAT Returns!

villapb

If she claimed back the vat on the purchase, on disposal she has no choice but has to charge vat. She is on dodgy ground transfering assets for no monies, as the van is the belongs to the company not her, never mind what the husband thinks..........its not his business to put undue pressure on. To not recieve monies at the market rate and not charge vat, imo is the same as theft tbh, the husband basically has stole the van form the wives company and the wife didn,t stop him. The company act states that its the duty of the director to protect the assets of the business and i think she failing to do that. He should pay the market rate and the vat imo to her company, why should her business loss out and his comapny gain, thats not fair.

T.C.

Both of them are just sole traders, but I think it is really a similar principle. I will have a chat with them and put my opinions in writing, to cover myself. Thanks.