Get your paperwork in order!

We have come across this so many times.

You may have been trading as a sole trader or partnership. Bank accounts, leases, HP agreements etc taken out at that time were all in the name of the sole trader or partnership.

You then incorporate. We have seen people carry on using the same bank account which can cause significant tax headaches. Property leases and finance agreements are also frequently overlooked.

In a recent case, both the lease agreement and lease rental invoices were in the name of the sole trader, which meant that input VAT included on rental amounts paid by the company were not reclaimable.

In this case, the operator of a B&B entered into a lease agreement to rent accommodation from the local council, with quarterly rental amounts of £8,750.00, plus standard-rated VAT.

The business was incorporated and the company registered for VAT and proceeded to claim the vat on the payments to the council.

But the lease was not in the name of the company and neither were the invoices from the council.

The VAT reclaimed had to be paid back.

The moral of this story is that you must make sure that you have all the appropriate documents in place and addressed to the right entity.



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