FRS and transferring your VAT number
VAT Question
My client is a VAT registered sole proprietor who has been operating under the Flat Rate Scheme (FRS). His turnover is now around £200,000, and he has formed a new Ltd Co and transferred his business into that Ltd Co. This was treated as a transfer of a business as a going concern, and my client wants to retain the sole proprietor VAT number and continue to use FRS in the Ltd Co. However, when we tick the relevant FRS box on the VAT registration application, the system is telling us that the client is not eligible as his turnover is over the £150,000 FRS entry threshold. Is the client not allowed to continue to use FRS if the VAT number from the sole proprietor is transferred to the Ltd Co?
VAT Answer
Unfortunately, the simple answer to the question is ‘No’.
While the transfer of a VAT number means that the new entity taking over the VAT number takes over the responsibility for the debts and liabilities of the previous entity, the use of schemes by the previous entity, or other issues, such as an Options to Tax made by the previous entity, do not transfer to the new entity with the VAT number.
This is because, under the relevant VAT legislation, the VAT registration of the new entity is treated as a new registration, even though the VAT number allocated to this new registration is that previously used by the previous entity.
As such, the new entity must make a new application for a scheme such as FRS, and, as this is a new application, entry is based on the turnover at the time of the new application; the fact that the previous entity was using FRS doesn’t alter this.
Therefore, as the Ltd Co’s turnover is over the £150,000 entry threshold, the Ltd Co is not eligible to join FRS.
Related VAT Questions
Evidence of Zero-Rate Building Services Regarding New Dwelling
My client is a DIY housebuilder and has engaged the services of a building contractor to build the house for them. The contractor is insisting that, in order for him to zero-rate his supplies to my
VAT on Baby Clothes
My client, who sells baby gifts and accessories, has just registered for VAT. Are these zero-rated supplies like children’s clothing? Items sold include baby sized towels, muslin cloths, blankets
Payroll for UK employees going to work overseas and offshore remote workers
We are frequently asked to advise on the Income Tax and National Insurance treatment of UK employees who are being sent to work overseas, and employees who will work remotely from an offshore locat
Supply and Installation of Window Blinds
My client supplies blinds for windows and back in 2021, supplied and installed some blinds to houses at a new housing development before the houses were complete.
What if the Supplier has Charged UK VAT
Do I need to reverse charge VAT for any supply of services ((i.e., software from Apple, Microsoft, Adobe etc…) with no valid vat receipt (no GB vat number). Is any supply of services (i.e.
Are ‘as new’ goods classed as “second-hand goods” for the Second-Hand Margin Scheme?
My client buys high end, high value footwear, mainly trainers, from private sellers so does not incur VAT when he buys the footwear. However, he will only buy the footwear if they are still boxed a
Real people, real results
Vantage Fee Protect provide market leading Tax Fee Protection
Insurance schemes through accountants.
Don’t be shy,
get in touch
Vantage Fee Protect provide market leading Tax Fee Protection
Insurance schemes through accountants.
"*" indicates required fields