VAT - Same Trade / 2 different entities
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Fingersan
Posts: 84 Regular contributor ⭐
Good afternoon everyone.
Here is a good Friday afternoon question for you:
I have just had a lengthy phone call from a client, who is a builder. He has a VAT registered Ltd Co and is struggling for work at the moment. He is getting a lot of requests from private individuals for work but gets turned down because of VAT.
He wants to start up as a sole trader and do the work that the company could do, but not charge VAT as he is a separate legal entity.
I suggested to him that this is effectively tax avoidance and that the Revenue would not be overly impressed, but I would look into it.
I did suggest deregistration for the company, but he was not too keen on this. The company only turned over £27,000 in last 12 months! However, he has put a tender in for a job that could push him over the registration limit if he gets it, but won't know before Christmas!
Could I ask your thoughts on the matter before I consult Abbey Tax.
All the best.
Here is a good Friday afternoon question for you:
I have just had a lengthy phone call from a client, who is a builder. He has a VAT registered Ltd Co and is struggling for work at the moment. He is getting a lot of requests from private individuals for work but gets turned down because of VAT.
He wants to start up as a sole trader and do the work that the company could do, but not charge VAT as he is a separate legal entity.
I suggested to him that this is effectively tax avoidance and that the Revenue would not be overly impressed, but I would look into it.
I did suggest deregistration for the company, but he was not too keen on this. The company only turned over £27,000 in last 12 months! However, he has put a tender in for a job that could push him over the registration limit if he gets it, but won't know before Christmas!
Could I ask your thoughts on the matter before I consult Abbey Tax.
All the best.
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Comments
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Basically you are right. He can't start another business with no VAT. It simply wouldn't be allowed and would cause all sorts of trouble for him. De-register, as you say.0
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Agree with TC. This is dissaggragation (excuse spelling) in the eyes of HMRC. However, where they different trades then it would not be a problem.0
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Thanks for your replies. It is very much how I expected it.0
