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bigduckontax
bigduckontax, Accountant
Category: Tax
Satisfied Customers: 4198
Experience:  FCCA FCMA CGMA ACIS
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CSH Ltd, a small residential property company was not registered

Customer Question

CSH Ltd, a small residential property company was not registered for VAT until few years ago when they bought an industrial unit and rented it to ACF Ltd. CSH Ltd was advised that it would be advantageous to register for VAT before the purchase. This was done and the VAT paid on the sale was reimbursed by HMRC. Apart from the industrial unit there is no other VAT applicable to any other part of the business. The HMRC has regularly collected, every quarter, a single item of VAT on the rent from the ACF Ltd. Can CSH Ltd now opt out of VAT REGISTRATION? Norman.
Submitted: 1 year ago.
Category: Tax
Expert:  bigduckontax replied 1 year ago.
Hello Norman, I am Keith, one of the experts on Just Answer, and pleased to be able to help you with your question. Assuming that the annual rental take from ACF Ltd is below the 83K VAT threshold in any one year then CSH Ltd can apply to de-register for the tax and cease to charge VAT on its rental invoices. Here is the advice from smallbusiness.co.uk: 'If you want to deregister voluntarily, then you need to tell HMRC the date that you want your VAT registration to stop. This will be either the date they receive your request or an agreed later date. You should continue to charge and account for VAT until HMRC confirms that they have cancelled your registration. You need to explain why you consider you will not reach the registration turnover in the future. If HMRC doesn't accept your request to cancel your VAT registration, you'll have to continue charging for and accounting VAT.' I ran the accounts of a company which did exactly this to recover the VAT on a new roof and other refurbishment invoices. We had to run the registration for two years, but it was worth it! I do hope that you have found my reply of assistance.
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Customer: replied 1 year ago.

Many thanks for your most welcome reply, Norman

Expert:  bigduckontax replied 1 year ago.
Delighted to have been of assistance, Norman. Thank you for your support.
Customer: replied 1 year ago.

Many thanks Keith for your excellent answer and I have another question. what do I do now?

Expert:  bigduckontax replied 1 year ago.
Unless it is relation to the question we have juts been discussing you raise a new question on Just Answer. If you wish me to respond please open the question by the words 'ForCustomer'
Customer: replied 1 year ago.

'ForCustomer

I formed a limited property company in November 2008 with myself and my two sons as directors with each son having 49% ownership and myself 2%. I owned three residential properties and by November 2009 I had transferred them to the new company as a gift and without any payment. I had all the valuations valued from a very reputable chartered surveyors company, and informed the HMRC what I had done. Then from my own personal account, I paid the all the Capital Gains Tax due based exactly on these valuations.

By November this year all the properties will be outside the seven year period and exempt from Inheritance Tax.

These properties were a gift and I wanted to them to appear on the balance sheet as capital, based on their valuation but my accountant has labelled it a directors Loan even although no loan agreement exists. The result is that the loan shows the company as barely solvent. The accountant says he does this because it is a tax advantage but I cannot see this.

In future years should any of these properties be sold what would the tax liabilities be?

Can the properties be quoted on the asset side of the Balance Sheet as “Property” and on the other side of the Balance Sheet as “Capital”?

I would value your advice and any other comments you wish to make.

Expert:  bigduckontax replied 1 year ago.
Sorry, Normal, this is a rather complex question and should be the subject of a new inquiry on Just Answer.
Customer: replied 1 year ago.

It relates to the first question and I would be happy for you to answer this one but do go about this?

Expert:  bigduckontax replied 1 year ago.
By making a new question on Just Answer and asking forCustomer
Customer: replied 1 year ago.

OK I will do this now

Expert:  bigduckontax replied 1 year ago.
Excellent.