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I am self-employed with a sole trading company in my own name and registered for VAT. Next year I plan to tour a play to festivals. I have set up a second sole trading company and opened a separate business bank account. I am currently raising finance to pay for the tour costs e.g. cast/crew wages & touring expenses, costume/props, printed publicity. We won't be selling tickets for the shows ourselves. All sales will be handled by the festivals' box offices. At the end of each festival, the new business will be sent a share of the ticket sales - typically 60/40 split with the venue. My understanding is that these UK festivals are VAT culturally exempt. Another takes place in Dublin, Ireland. Our share of ticket sales will be used to cover any outstanding expenses. Then I will invoice for any remaining profit as I won't have claimed any other wage/expense. I estimate the calendar year turnover to be around £45,000 - most of which will be in 2019/20 financial year. My questions are: Do I have to account for the new business expenses and sales in my own self-employed VAT returns? If I do have to include in my self-employed VAT, what should I do about donations/sponsorship that the new business may receive to cover the tour costs - i.e. not payment made to me personally? Many thanks!

I am self-employed with a sole trading company in my own name

That is unlikely, unless you and the company are carrying on different trades.

What trade do you personally carry on?

What trade does the company carry on?

Sorry, what’s unlikely?

I’m a self-employed writer and have operated as a VAT registered sole trader for many years. The new business is a theatre company so the businesses are related but not the same.

You said that you has set up second company for the tour. Does that mean you are self employed (trade 1) and have 2 companies (trade 2 and trade 3)?

Two trades - one as a VAT registered writer and now this new theatre company.

So you are not self employed.

You have a vat registered company that receives the profits from your writing, and you are thinking about setting up another company.

Whether company B needs to be VAT registered will depend on how similar the activites are.

You cannot invoice for profits.

You should engage an accountant.

Thank you for responding. I do already have an accountant. Unfortunately he hasn’t been able to help with this complicated VAT issue which is why I was hoping there might be a VAT specialist on this VAT forum who could advise.

Hello Riverbank

sole trading company

This is a very confusing phrase you have used and it is not 100% clear to me what the legal trading status is for either business.

Can you confirm for each business whether that is you as an individual sole trader registered for class 2NI or whether there is a limited company registered at companies house which is the business entity.

I would recommend always using the term "sole trader" (you self employed paying class 2NI) or limited company (registered at companies house) and never mixing the two terms up.

Thanks for responding. Both businesses operate as sole trader - not limited companies.

VAT law considers the 'person,' not the business. So two sole trader businesses are a single 'person' for VAT purposes. If the aggregate taxable turnover exceeds £85k you have to register for VAT.