Can I backdate VAT switching from sole trader to Ltd company?

Forum Categories VAT REGISTRATION Can I backdate VAT switching from sole trader to Ltd company?

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    I went over the VAT threshold during a busy period of growth/sales from Oct-Dec with a sole trader business. In January, my old accountant advised me to register the business as a limited company and then put the past 3 months of the sole trader sales/VAT on the company which would bring down the amount I would be fined for going over the threshold.

    The new accountants I’ve been speaking to have said I can’t do this. One is advising that I should register for VAT as a sole trader retrospectively to pay the VAT before the company was formed in January and then deregister.

    Can anyone offer any advice? It’s hard to know what to do, especially when I’ve been let down by my old accountant who hasn’t done anything on my accounts for 4 months!

    Trevor S

    The taxable supplies that exceeded the VAT registration threshold were made by the sole trader business.  You cannot retrospectively “reassign” those sales to a limited company, especially one which didn’t even exist at the time that they were made!  So I think that your new accountant is right – you need to register the sole trader business.

    As for the limited company, you potentially have a choice.  If you will need to register soon/straight away, you can apply to have the sole trader registration transferred – this may give some admin/accounting benefits through reducing the number of changes.  But if you think it may be a while before the company will need to register, you may prefer to deregister the sole trader business and leave registering the company until the appropriate time.

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