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ready salted
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Discussion Starter · #1 · (Edited)
A friend of mine is a sole trader in electronics/repairs, employing 6 people & has managed to keep his business just under the VAT threshold for the past few years :tup:. He's now decided that he's had enough of being self employed & has approached a multi national company for a job as a manager. He's at the stage where they've sent him a questionnaire to fill in. One of the questions asks what his turnover has been for the past few years, managing his own company. Stupidly, he'd bigged himself up on his CV & the amount of production he's claimed he'd done would have put him well into the VAT threshold. He's now worried in case the company do a check & find that he'd not been wholly truthful on his CV

So, the question is, is it possible for a multinational company, or any other for that matter, to check to see if he was VAT registered as a sole trader, or to see how much his turnover really was?? I know that as a limited company the annual accounts are there to view, but what about a sole trader?? Is there any way they could find out how much he actually earned??

What would you do in his situation, I've said to come clean & put down his actual figures, but he reckons that he'd never get the job if he did that.

I couldn't answer his questions, so I thought I'd ask the fountain of knowledge that is R n S :tup:

cheers...Nige
 

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Generally there would be no trace,however if they have access to a Credit Reference Agency then they could trace (if he applied for a loan etc)
really I doubt very much if he'd be caught

Sole trader accounts are only between sole trader and any partner, the accountant who throws together the accounts and inland revenue (HMRC)

Tracing vat numbers? you can phone the HMRC and check numbers if legitimate,I suppose than you could also check if a person is registered.

Vat threshold ?? there used to be a margin where you'd go over but still not have to register(you'd need to check that,is still there)
 

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it is possible to check if a company is VAT registered, or sole trader to that mind, and it is quite simple to do, but im not sure how.

he may need to make a convincing arguement as to why he never registered, maybe saying he ran 2 businesses seperately, whose combined turn over was higher than vat threshold
 

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My name is Martin
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To start with I'm a bit confused - If he employs 6 people, surely his turnover is greater than £73k? Does he have a PAYE scheme to employ these people?

As for the company, there is no means for them to find out the earnings of a sole trader or partnership. If they wanted to contact HMRC to try to blag it, they'd have to have his permission to act as an agent via a 64-8 to discuss his affairs. I can't see really how they could get the information via a credit agency.
 

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Accepting the situation is as you have described, there are other factors that may enable a sole trader/limited company to remain unregistered for VAT.

For instance - if the majority or all income comes from government i.e. direct or sub contract funding, then that income is non vatable.

The point is - the turnover may look vatable to anyone looking but it does not mean that the individual or company need to be vat registered.

The CV reader would need to delve deeply into the accounts to sus anything!

That! is not there business...
 

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As I said.....Tracing vat numbers? you can phone the HMRC and check numbers if legitimate,I suppose than you could also check if a person is registered.

the slight problem in saying is Joe Bloggs registered is ..is it Joe Bloggs or Joe Bloggs t/a Rough and Dangerous or whatever,to a point where the Data Protection Act kicks in.........as 30psi points to


he may need to make a convincing arguement as to why he never registered, maybe saying he ran 2 businesses seperately, whose combined turn over was higher than vat threshold

Then he should split them turnover wise,if he combines them then he should register,

and as has been point out as well HMRC have access to Inland Revenue,Vat and through DWP National Insurance etc

I'd sit tight and hope for the best, what's done is done..no going back
 

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ready salted
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Discussion Starter · #8 · (Edited)
Thanks for the replies they're appreciated, but maybe I need to clarify something that I didn't in the original post. His business is quite legit, in that he employs 3 skilled guys & 3 trainees (school leavers). His turnover is just under the VAT threshold & he has legitimate accounts. However, when he applied for the job as manager with this big company, he bigged himself up by saying that he had a much larger tunover than he actually did & that he employed more people than he actually does. It's not that he can't do the job as in the past he'd managed very large companies.

The reason he bigged himself up this time is because he'd applied for a great number of jobs by being totally truthful & didn't get as far as a reply from the said companies. , So, this time he tried a different approach & elaborated somewhat. The people at the company don't appear to want to know the turnover of his previous employment, only the one that he's in now.

So, his concern is does he come clean & say he's only managing a small company (they're looking for someone who can manage a large company) or does he say nothing & stick by what he put on the CV?? He's concerned that if he sticks by his CV, they might be able to check somehow re his VAT status or income tax paid, is this traceable?? ie is there any way they could tell he's been elaborate with the truth??

cheers...Nige
 

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If the large company has any sense then it would know that a sole trader would have a lot more experience of the day to day running and all aspects of a company,and is or should be more efficient

As I said just sit tight,say nothing more unless directly asked
 

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My name is Martin
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His issue will be when the big company send a reference request to the smaller company that he manages/owns. Might get a bit tricky and is the likely avenue where they'd work out he's been convenient with the truth. So this needs to be managed well to make it a successful blag.

They can't check by the way. I doubt they'd ask for copies of his accounts as that will be a bit rude of them.

Still can't see how his turnover is less than the threshold and taking out of that a number of salaries unless they're very low wages.
 

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As said previously, stick to the story and unless he's gone from an actual £60k turnover and 3 guys to a 1.5Million turnover and 600 staff which would be a difficult lie to maintain. I very much doubt they would look that far into it and they certainly can't go poking around in his accounts to any serious degree. As a sole trader and not limited company they have to take his word for it unless he gives them permission to poke around.

Besides as it appears that he hasn't volunteered a VAT number there is nothing to check. Falsifying a VAT number is an easy check and a whole new can of worms though.

Ensure he has a cover story if, and only if, the VAT question is asked. Personally I would not volunteer anything.
 

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from the Vat pages

If you've gone over the threshold for registration temporarily

You can apply for exception from registration if:
you have to register for VAT because the value of your taxable supplies in the previous 12 months has exceeded the registration threshold of £73,000 (including the value of supplies made by a VAT-registered business that you have taken over)
you can demonstrate to HMRC that in the longer term you will only be trading below the de-registration threshold of £71,000

You can ask HMRC if they can make an exception, and allow you not to register for VAT, by filling in a VAT registration form, stating why you are applying for an exception.

If HMRC agrees to make an exception and allow you not to register this time, you must let them know of any relevant change in circumstances - for example, if your turnover goes over the threshold again.

If HMRC does not agree to make an exception, you will become registered for VAT from the day you should have been registered. You will need to account for VAT from that date.
 

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His issue will be when the big company send a reference request to the smaller company that he manages/owns.

Don't think they'd do that as he'd be effectively "refereeing" himself...If you think about it
 

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My name is Martin
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Exactly - But it's a bit unclear as to what he's said. My interpretation was that he 'manages' the company which would infer that he is employed by it rather than owning it.
 

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If he were to get the job via 'fraudulent 'claims and was then discovered he could be prosecuted for 'obtaining pecuniary advantage by deception'.
 

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heres my take

I employee people in my day job as a manager and also sub-contract companies as part of my role. Interviewers expect a bit of bullshit. Everyone is climbing a ladder or trying to better themselves and generally employers aren't looking for cheap labour, they pay market rates for capable qualified people. Nobody expect someone to a job which is beneath them, but they will expect him to be able to fill the role or step up.

What the interview process should be assessing is whether he is capable now or in time. If when he is asked about his previous company, I'd suggest he give a brief run down of what his company did and produce case studies or references from existing clients. If they specifically ask what his turnover was then he should be truthful. Forget the VAT thing, all sole traders have legitmate ways and means of avoiding VAT, it's not unreasonable to expect a small company on the cusp of the threshhold to take legitimate measures to avoid it as it's added cost and complexity for small businesses.
 

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If he gets the job and can do it to the new companies satisfaction then fine, he's the right guy for the job. If he doesnt get the job then it's not the fact he didnt big himself up as previously, they just didnt want him. He may as well ride the wave & see if they take him on. I also can't see how 3 employees + him + business turnover doesnt exceed the VAT threshold. I only have me & one other working for mine & that has to be VAT registered.
 
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