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Where Taxpayers and Advisers Meet

VAT Threshold on different accounts with a same address

UKtrader
Posts: 13
Joined: Sat Sep 16, 2017 9:20 pm

VAT Threshold on different accounts with a same address

Postby UKtrader » Fri Feb 09, 2018 7:40 pm

Hello, I am a sole trader selling online mostly shoes with a turnover just under VAT threshold, can my wife (a housewife) be a sole trader herself and start selling online as I do from the same address? if this is possible is this means that we are completely separate businesses and our turnover will be separate too? if not this means we have to be VAT registered if are combined turnover exceed £85k. Your helps is very appreciated. Thank you

GlobalTaxAdviser
Posts: 622
Joined: Fri Dec 05, 2014 1:18 am

Re: VAT Threshold on different accounts with a same address

Postby GlobalTaxAdviser » Fri Feb 09, 2018 8:25 pm

Not really will come under artificial separation

UKtrader
Posts: 13
Joined: Sat Sep 16, 2017 9:20 pm

Re: VAT Threshold on different accounts with a same address

Postby UKtrader » Fri Feb 09, 2018 9:06 pm

Thank you for your answer could you please clarify what's artificial separation is this mean we can have both businesses registered to the same address without a need to register as VAT busines. Thank you

UKtrader
Posts: 13
Joined: Sat Sep 16, 2017 9:20 pm

Re: VAT Threshold on different accounts with a same address

Postby UKtrader » Fri Feb 09, 2018 9:07 pm

Not really will come under artificial separation
Thank you for your answer could you please clarify what's artificial separation is this mean we can have both businesses registered to the same address without a need to register as VAT busines. Thank you

spidersong
Posts: 352
Joined: Wed Aug 06, 2008 4:05 pm

Re: VAT Threshold on different accounts with a same address

Postby spidersong » Mon Feb 12, 2018 10:36 am

Artificial Separation is where something that is essentially one business splits into separate entities in order to avoid VAT registration i.e. a single ebay business operating through two sole traders. HMRC will treat businesses with substantial financial, organisational, and economic links as one business especially where they operate within similar fields or customer bases.

So if you're selling men's shoes, your wife sells ladies shoes and you're both using the same suppliers, both using ebay, use the same phone number, warehouse (backroom?), same computer/network then HMRC will look at that and say 'hold on, you're really just one business selling shoes on ebay'.

However if you sell shoes online, but your wife sells consumer electronics and you have different employees (if any), different customer bases, different bank accounts, books, phone lines, suppliers, don't work on each others businesses and don't cross support each other in different ways such as shared purchase of stationary/accountants/packaging etc. then HMRC will treat two different businesses as two different businesses.

So your initial post doesn't really give enough information, but as a default HMRC will probably say that two individuals operating out of the same residential address as ebay traders are likely to be a single partnership and substantially linked with each other.

UKtrader
Posts: 13
Joined: Sat Sep 16, 2017 9:20 pm

Re: VAT Threshold on different accounts with a same address

Postby UKtrader » Mon Feb 12, 2018 10:21 pm

Artificial Separation is where something that is essentially one business splits into separate entities in order to avoid VAT registration i.e. a single ebay business operating through two sole traders. HMRC will treat businesses with substantial financial, organisational, and economic links as one business especially where they operate within similar fields or customer bases.

So if you're selling men's shoes, your wife sells ladies shoes and you're both using the same suppliers, both using ebay, use the same phone number, warehouse (backroom?), same computer/network then HMRC will look at that and say 'hold on, you're really just one business selling shoes on ebay'.

However if you sell shoes online, but your wife sells consumer electronics and you have different employees (if any), different customer bases, different bank accounts, books, phone lines, suppliers, don't work on each others businesses and don't cross support each other in different ways such as shared purchase of stationary/accountants/packaging etc. then HMRC will treat two different businesses as two different businesses.

So your initial post doesn't really give enough information, but as a default HMRC will probably say that two individuals operating out of the same residential address as ebay traders are likely to be a single partnership and substantially linked with each other.
Thank you very much for your help, you have answered my question


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