Property Management Company

[Matt2008]

Hi there - my wife and I have various BTL and commercial properties as individuals. We have a property management business (limited company owned by my wife) which collects the rent for the residential property and charges commission. It is not registered for VAT because the turnover is under £85k. We are thinking of setting up a separate business (also a limited company in my wife's name) to manage the commercial property. Is there any reason why this wouldn't be acceptable? We will deduct the commission as an expense in our self assessment returns and leave the money in the companies. They will both be genuine businesses

[jerome.lane]

There is a risk that HMRC will view the two entities as one composite business and consider that VAT should be accounted for across both businesses. I assume there are reasons you have not considered incorporating one or both businesses and that you have no direct interest in the management company.