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fantasticmax
29-09-07, 14:26
HELP!
I registered a family member online for Flatrate VAT as a sole trader due to the new IR35 laws.
The person I registered has then decided to become a ltd entity so I advised them to use an accountant and here is where the problems have started.
I told them to let their accountant know that I had registered them for flatrate vat and to ask them to transfer legal entity to the ltd company. The accountant then contacted HMRC only to be told that they couldn't convert him to a Ltd company and that he had to re register for VAT. They did this and for some unknown reason he has been registered for standard vat and not flat rate.
Does anybody know what I can advise him, as I feel that HMRC have not done their job correctly and think that they should convert this person to flat rate from the date the company was incorporated.
My question is, would you raise this to HMRC or would this person be wasting their time?

peugeot
02-10-07, 08:33
I doubt you could re-register retrospectively especially if HMRC have already issued a VAT return/registration certificate. Unfortunately the onus is on the taxpayer to check the VAT Registration Certificate to ensure the details are correct. If they are not correct they will not re-register from the date of incorporation they can only change to flatrate going forward.

As the Ltd Co is a separate legal entity i.e. an "individual" within its own right then I think HMRC are correct in stating that it would have to be registered on its own for VAT - it's the company that's Ltd not the individual. The sole trader, however, could have transferred his/her existing VAT registration number. I would contact HMRC once more just to see if there is a way around it - some staff at HMRC are more helpful than others.

If the flatrate scheme is beneficial for your client and you cannot amend the existing registration application, then I would apply to be transferred onto the scheme in time for the next return (if possible).

Kind regards
Steve