Sole Trader VAT Query

System
System Posts: 100,534 🤖 Admin 🤖
edited June 18 in AAT member discussion
Hello all.

Sole trader (roofer) has just been notified by his accountant that he exceeded the registration limit last December (2005) and must now pay VAT from that point, even though he hasn't charged VAT to his customers.

If anyone could help on the following points please, it would be much appreciated:

1) What is his registration date - is it the date the limit was exceeded, or the first day of the second month after?

2) Will he have to pay in one lump sum, or can he pay by installments considering the amount may be quite large?

3) Is there any way he can reduce the VAT liability, or should he just hope any reduction in tax on a lower profit figure will offset it?

Many thanks in advance, Scott.

Comments

  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:Sole Trader VAT Query

    Nasty one!
    If the VAT have come after him, I would have thought they should have told him what his VAT registration date is, or they should at least have to agree it.

    VAT don't normally allow time to pay, but it is always worth asking.

    He could reclaim VAT on capital items purchased previous to his VAT registration.

    I hope I have been of some help. Maybe someone else can give you some more help.
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:Sole Trader VAT Query


    If some of his main customers are VAT registered it may be worth him issuing revised invoices to them (with VAT added on top) and asking them to pay the VAT to him (which they can then reclaim). I had one client who did this successfully, but I guess it depends on what kind of relationship he has with his customers.

    And i would think that he should be registered from the first day of the second month after he exceeded the limit.

    Also, I don't want to jinx it, but the client I refered to above didn't ever get any penalties for late registration, which surprised me (in a good way, of course!)

  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:Sole Trader VAT Query

    Any new build work? That is zero rated. Tell him to find every invoice for everything he has ever bought - it will all mitigate the amount he owes.

    Claudia
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:Sole Trader VAT Query

    Many thanks for your responses.

    I will advise them of what you have said - will update you as and when.

    Scott.
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:Sole Trader VAT Query

    I agree with all the above. If he exceeded the threshold in December then he would be liable from 1st February.

    Remember you can go back 3 years for any VAT to reclaim on assets still held and 6 months for services. Remember to reclaim VAT on any stock still held as well.

    Every little helps..
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:Sole Trader VAT Query

    Thank you for your input Dean - very helpful.

    Scott.

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