VAT - Same Trade / 2 different entities

Fingersan Registered 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.


  • T.C.
    T.C. Registered, Tutor Posts: 1,448 Beyond epic contributor 🧙‍♂️
    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.
  • groundy
    groundy Registered Posts: 495 Dedicated contributor 🦉
    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.
  • Fingersan
    Fingersan Registered Posts: 84 Regular contributor ⭐
    Thanks for your replies. It is very much how I expected it.
Privacy Policy