VAT fright

[patricia.lyon@btinternet.]

Over the years I have built and run 3 small business, none connected, all under the VAT threshold. Last year I bought into a counselling franchise which immediately had a turnover that required VAT registration. I am a sole trader in all my businesses.
I had an inspection for my franchise last week and discovered to my horror that all my eligible businesses are required to account from VAT from the date I registered the new business. This apparently is because the individual is registered, not the business. The amount I will be due to pay over is around 6k which might be small to some but quite large to me.
Hoping someone might throw some light on my options. I don't think i'll get out of paying the back dated stuff but was wondering if I change the franchise to a limited company if this will put the other business back on an unregistered footing.
VAT is a nightmare when you get outside the box as there help files are extremely complicated and difficult to find the topic you look for.

[Rob]

Patricia,

I do not envy your position. Anything involved with the government is a complete nightmare and difficult to know exactly where you stand.

As your question is fairly technical I would advise that you seek assistance from an accountant based near you. You need the right advise now in case you make a tactical error which will cost you more in the long run.

When seeking out an accountant speficially ask whether they have VAT experience. Also get them to check the payment you have been requested to make - is this just the back VAT owed, does this include any fine or there more to come on top of that?

With as many businesses as you have you must seriously look at having an accountant on board. The bigger your 'empire' the more you are going to miss as regards new legislation or even new tax breaks.

Caroline from C.A.B.s, a forum member may have some input here?

[PaulSimister]

Patricia

This is definitely an issue for an accountant.

You have hit a problem that I wouldn't have thought about but a limited company is seen as separate from you as a sole trader.

The marketing issue for VAT registration is whether it matters to your customers. As most businesses are registered, they don't mind whether VAT is included or not.

It matters much more to any private individuals (and unregistered businesses) who buy as they will be charged 17.5% more or you will have to reduce your margins. Neither are which are good news.

Unfortunately working through a limited company has other issues since the corporation tax/PAYE/national insurance issues are not as lenient as they are for a sole trader.

In addition there are tax issues about the incorporation route because you are effectively selling a business you own to a company.

Find yourself a good accountant and while it will cost, it will stop you making an expensive mistake and put your mind at rest.

"If you think good advice is expensive, you should see the cost of bad advice."

[C.A.B.s]

Patrica

I totally agree with what everyone else has said, go find a accountant or use your existing one (if you have one).

They are not just there to do your books at the end of each financial year, but the right accountant can also give you very good sound advice, and sometimes people take the accountants word as god (dont ask me why).

Being a qualified bookkeeper i can totally sympathise with your situation, obviosly your bookkeeper (if you have one) never alerted you to the problem or looked into it properly.

If you need any further help or advice on bookkeeping or anything financial (but not VAT related), i would be more then happy to try and help you.

Caroline

[dixgomez]

Yeah they are not just doing your book at the year end financial but they also gives you a great advice and strategies....





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IRS Problems (www.taxmatterssolutions.com)

[adward]

Patrica

I totally agree with what everyone else has said, go find a accountant or use your existing one (if you have one).

They are not just there to do your books at the end of each financial year, but the right accountant can also give you very good sound advice, and sometimes people take the accountants word as god (dont ask me why).

Being a qualified bookkeeper i can totally sympathise with your situation, obviosly your bookkeeper (if you have one) never alerted you to the problem or looked into it properly.

If you need any further help or advice on bookkeeping or anything financial (but not VAT related), i would be more then happy to try and help you.

Caroline
yes, what he said is right!! Accountants are racing ahead of other professions in their use of new technologies to grow their business, according to research commissioned by CCH.