October 29th, 2012 / Insight posted in

Transferring VAT to my new firm

SM writes: To help raise a bank loan to finance the fit-out of a new office, I recently converted from a sole trader to a limited company. My Vat registration is still in the name of the sole-trader business. Should the company now be registering for Vat or can I ask Customs to change the name on my return?

Changing your business to a limited company is a legal change and Customs should be made aware of the transfer of the business, writes Jon Sutcliffe, partner at Kingston Smith LLP. Your transfer appears to be a transfer as a going concern, so you could get a new Vat registration or transfer the old registration to the limited company. The latter will usually be the easier route.

To transfer the old sole-trader registration to the new company, you will need to fill in forms Vat1 and Vat 68, which can be downloaded from hmrc.gov.uk. The transfer will be dependent on the existence of taxable supplies and on having no outstanding surcharge assessments. It will also require your personal consent as the sole trader and the limited company’s consent.

It is assumed that you are late notifying Customs of the change. The right amount of Vat will have been paid using the retained Vat number but will have been paid by the wrong entity, so the returns are not correct. However, if you notify Customs of the change as soon as possible this will minimise any problems.