Help please

tinajanine65

We have a self employed husband and wife partnership who currently run the food side of a leisure complex. They have now been asked to take over the running of the bar area as well. This will take them over the VAT threshold, which they do not want. Would it be ethical for the wife to run the bar and the husband to run the food? Or could both run the food and one of them run the bar?

JodieR

Look at point 13.5, should help you...

http://customs.hmrc.gov.uk/channelsPortalWebApp/channelsPortalWebApp.portal?_nfpb=true&_pageLabel=pageVAT_ShowContent&id=HMCE_CL_000086&propertyType=document#P534_57878

tinajanine65

VAT query

Thanks for the response, very helpful.

deanshepherd

Don't let the HMRC guidance put you off.

Presumably both trades are being run separately at the moment so there is no reason why this should not continue to be the case once your client takes over.

I'd probably make one (or both) an LTD.

tinajanine65

Thanks for response deanshepherd, however sorry for being dumb but what would be the benefit of making it an LTD?

Vonni

With reference to Jodie's response yes I have come across the 'artificial seperation' of a business to avoid the requirement to register for VAT, but this is quite clearly not the case here.

The original business already exists and is not really being seperated.

However, there might be a problem with status - all the work being carried out for one customer - wouldn't the IR35 rules kick in?

Are you providing your own catering tools & equipment?
Do you risk your own money?
Are you able to provide alternative staff, at your own expense, to provide the services for you?

Just saying you're self employed doesn't mean you are and the Revenue may challenge this.

Vonni

deanshepherd

tinajanine65 wrote: »

Thanks for response deanshepherd, however sorry for being dumb but what would be the benefit of making it an LTD?

Individuals (or partnerships) once registered for VAT have to apply VAT to all businesses they are involved in (including, potentially, rental properties). Therefore, if you make one business a separate legal entity, one can be VAT registered and the other not.

JodieR

Vonni wrote: »

With reference to Jodie's response yes I have come across the 'artificial seperation' of a business to avoid the requirement to register for VAT, but this is quite clearly not the case here.

Sorry, I wasn't trying to imply that the client in question IS trying to artificially separate the business, I was refering Tina to the guidance notice so that she's aware of when businesses are and aren't treated as the same entity for VAT purposes and can advise them accordingly on what forms the business(es) should take. I agree with Dean that on the limited amount of info we've got that setting up a Ltd Co would probably solve this problem.