Is this Artificial separation?

[william12]

Please can any one advise?

I have 2 Ltd companies Both employed by the same property investor.


company 1 (Not Vat Registered)
Primarily lettings and Marketing

company 2 (Not Vat Registered)
Deals with the maintenance of the properties and subcontractors.

Company no 3 (vat Registered)
Supplies material, kitchens, beds, bathrooms and furniture.

I and my Mrs are directors of both companies.
Companies 1 & 2 will turn over circa £60-£70,000
Company 3 will turn over Circa£150,000.

My intention is to take 0 money out of companies 2 & 3 for a couple of years and leaving the money build up, when my Son turns 14 make him a director and gift him the shares.

I have not slept for a week worrying about this opportunity.
Is this legal?


Thank you in advance

[les35]

It is not always easy to draw a line in such cases!
However, the nature of the businesses means they might otherwise operate as a single business. HMRC may therefore take an interest and seek to aggregate the taxable turnovers.
[In a recent case (Grand Hotel, Folkestone), HMRC back-dated their VAT assessments, on the basis that multiple legal entities were actually a single business.]