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VAT transfer from sole trader to limited company

Gem7321Gem7321 Experienced MentorDevonMAAT, AAT Licensed Accountant Posts: 1,438
I have recently taken on a new client - a limited company - and have come to submit the VAT return and discovered that the VAT has never been updated from sole trader status. The company started in October 2014. I am completing VAT1 and VAT68 now but where I enter the date of transfer will there be any implications if I enter the actual transfer date of nearly 2 years ago?!

Any advice gratefully received.



  • MarieNoelleMarieNoelle Trusted Regular Hampshire/Surrey borderModerator, MAAT, AAT Licensed Accountant Posts: 1,432
    My thoughts are that there would be a penalty under sh 41 of FA2008 (failure to notify VAT registration) but the penalty is a % of the potential loss of revenue which in your case may be nil. However I would welcome any other views on this.
  • TreadStoneTreadStone Feels At Home AAT Licensed Accountant Posts: 280
    edited June 2016
    I would say that HMRC are well within their rights to issue a late notification penalty.

    Whether they actually do or not is up for debate as any such penalty could more than likely be successfully challenged as there has been no revenue loss to HMRC. One such case recently went to Tribunal (J&W Brown- TC05101) according to a colleague.

    So you may be opening yourself up for a few letters to be going back and forth but if I was a betting man, I'd say they'd be ok ;)
  • Gem7321Gem7321 Experienced Mentor DevonMAAT, AAT Licensed Accountant Posts: 1,438
    Thanks, I was worried that I could be opening a can of worms because the company has been charging VAT to customers without being VAT registered. But as you say there is no loss of revenue. Will wait and see!
  • peamanpeaman Well-Known Registered Posts: 123
    I have come across this before, I just entered the transfer date as the first day after the VAT return I was submitting. It was a bit of a fib, but I didn't want to waste time appealing penalties. It didn't cause me or the client any problems!
  • JawzJawz New Member West MidlandsRegistered Posts: 53
    I would go with October 2014 as date of transfer, and should they were to to issue your client with a penalty notice, then I think you could easily appeal it on the basis of 'no loss of revenue' as stated by @MarieNoelle and others...
  • Gem7321Gem7321 Experienced Mentor DevonMAAT, AAT Licensed Accountant Posts: 1,438
    Gone in with October 2014 - sitting tight now!
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