vat registration

by **jbs1** on Mon Jan 23, 2012 10:03 pm

I've got a situation were a husband & wife are running a take-away as a partnership, their turnover is £4Ok, now the husband has bought another take-away which he is running as a sole trader. The turnover of this new shop is also £40k.

My questions is how does HMRC view this, do they view the businesses as separate in their own right or do they now require VAT registration as the threshold has been exceeded if the 2 businesses turnover is combined?

To clarify both businesses are operating independently of each other, they have their own trading names and own accounts. The only connection is the husband owns one 100% and has a 50% share in the other.

by **les35** on Tue Jan 24, 2012 9:59 am

HMRC have powers to aggregate the turnover of two or more businesses, where they think that the separation is artificial. In order to do this, there must be economic, financial, and organisational links.
Their guidance is in Notice 700/1, chapter 13 (http://customs.hmrc.gov.uk/channelsPortalWebApp/channelsPortalWebApp.portal?_nfpb=true&_pageLabel=pageLibrary_PublicNoticesAndInfoSheets&propertyType=document&columns=1&id=HMCE_CL_000086#P533_58214).
Where the arrangement is genuine, HMRC should not take further action. Unfortunately, you cannot always predict their response to a situation.

by **King_Maker** on Tue Jan 24, 2012 11:19 am

Any Aggregation Direction by HMRC will not be retro-active.

Useful article here :

http://www.taxationweb.co.uk/tax-articles/vat-excise-duties/will-splitting-my-business-save-vat.html