Jessica started this topic @ 16:24 on 15/09/2004
Hi,
This is my first time on the forum although I have popped in and out over the last few months. I am in the set up stage of creating a recruitment business but due to my contract I cannot actually trade for 6 months. I have not registered the Company yet, although I will be doing soon - for two reasons really, firstly I am struggling to decide on a name and secondly I do not want to alert my previous Company too early of my plans. I am however already purchasing things for the business and incurring expenses and I wondered if I was able to still claim the VAT back or does the Company have to be registered to do this?
What is the best way around this, as I have given up my full time position to set up the business and am working from home at the minute for a business that legally still does not exist?
Any assistance would be appreciated.
Jessica
RE: Business Expenses
James Smith | 15/09/2004 05:09 PM
Jessica,
In order to reclaim VAT you do generally need to be VAT registered.
However you can reclaim some "pre registration" VAT incurred whilst setting up your business. This applies to services incurred 6 months previous to registration and assets purchases up to 3 years that are still in use on the date of VAT registration. Suggest you take some advice when you get to fill in your first return as to what you can include.
Legally speaking if you are setting up your business now you are by default acting as a sole trader as you cant be a limited company as it isn’t set up (!). This means you will have to think about registration with the IR (you are supposed to do this within 3 months of starting up on your own). This isn’t necessarily a bad thing to be, as being a sole trader is easy in terms of your taxes and paperwork, and can be converted to a ltd co. later on.
I don’t actually see why you cant set up a ltd company now (if that is appropriate for you – big topic on its own) and just not trade, although you may need to take a legal opinion on that one looking at what is defined as trading, as this may differ from the definition the tax authorities use. Merely setting up a company wouldn’t surely be noted by your employers unless they are aggressively reviewing all new limited companies being start up. Regarding names, these can be changed, although it is a bit of a pain with bank accounts.
I hope this is of some help,
Regards,
------------------------
James Smith
Chartered Accountant
www.jamesesmith.co.uk
01235 536 773
---------------------------
Your indispensable guide to Small Business Bookkeeping, Self-Assessment & VAT
RE: Business Expenses
Ian J | 15/09/2004 05:45 PM
[quote]due to my contract I cannot actually trade for 6 months[/quote]
Is that a restrictive covenant in your contract or are you still being paid by your previous employer?
If your recruitment business will be with temps and not permanent placements please feel free to contact me if you need any help with funding the operation as 50% of my business is with recruitment
------------------------
Ian
Factoring ,
Invoice Discounting ,
Trade Finance and
Asset Finance specialist broker.
Founder member of
Independent Factoring Brokers Association
RE: RE: Business Expenses
Jessica | 15/09/2004 05:50 PM
Hi Ian,
It is a restrictive covenant - I am no longer employed by them. It will be all permanent placement - but thanks for the offer.
Jess
RE: RE: Business Expenses
Ian J | 15/09/2004 05:57 PM
It might be worthwhile getting your previous contract looked at by a solicitor as unless you received extra value other than employment and remuneration it could be that the restriction on starting up your own business is unlawful.
Hairdressers used to get clobbered that way until the Governement tightened up the laws on unfair contract terms
------------------------
Ian
Factoring ,
Invoice Discounting ,
Trade Finance and
Asset Finance specialist broker.
Founder member of
Independent Factoring Brokers Association
