VAT registration=Business?

[randommol]

Hi

Hopefully someone can help.

As far as I am aware a private individual cannot register for VAT. Does it follow therefore that if you are registered for VAT that you must be considered a business?

I am trying to prove, for reasons that I shan't bore you with, that my late father was running a 'business' rather than conducting a 'hobby' from his home address. The business he was conducting involved bloodstock trading and due to the fact that this form of activity invariably results in a loss which is then used to claim relief from other income tax HMRC considered it to be a 'hobby' from the point of view of income taxation. For this reason I am therefore unable to present income tax returns to validate my claim. However he was registered for VAT and I have a stack of returns to prove it!

I realise that there seems to be a contradiction here but any help would be gratefully received.

[les35]

A private individual CAN register for VAT. The legislation considers a 'person,' not a 'business.'
You should also note that Direct Tax and Indirect Tax legislation has slightly different definitions of a business activity. Your main question appears to be the direct tax rules; and you may use the indirect tax treatment of that activity to argue your case.
You may try to work through the HMRC website for the information, or perhaps engage an Accountant familiar with these issues, to work with you.

[bd6759]

Any activity that invariably results in a loss, cannot have a profit seeking motive.

[randommol]

A private individual CAN register for VAT. The legislation considers a 'person,' not a 'business.'
You should also note that Direct Tax and Indirect Tax legislation has slightly different definitions of a business activity. Your main question appears to be the direct tax rules; and you may use the indirect tax treatment of that activity to argue your case.
You may try to work through the HMRC website for the information, or perhaps engage an Accountant familiar with these issues, to work with you.

Thanks for your reply. If the legislation considers a 'person' and that 'person' is VAT registered do you know if that 'person' is considered to be a business?

PS. You may have answered the question in your first reply but I'm not sure I fully understood. Sorry.

[les35]

In VAT legislation a 'person' may be a natural person (sole trader, partnership), or a legal person (limited company, LLP, etc).
The second question is whether they are making supplies in the course of a business. The tests are complex, and are partly based on case law, but the making of losses does not prevent an activity being a business.

[section 44]

the making of losses does not prevent an activity being a business.

indeed and Longridge recently gave a very broad view of business

[bd6759]

For loss relief there has to be a trade (the term "business" is not the test). And that trade must have the expectation of a profit. If it invariably makes a loss, then sideways relief will not be due.