I recently saw a potential new client, husband and wife - operating as a driving school business.
Essentially the husband is the qualified instructor and the wife plays no part in the running of the business - other than "administratively". The business is divided in two and run by two limited companies, the shareholder and director of each being individually the husband and wife. Both companies thus come within the VAT registration threshold and consequently are not VAT registered.
I advised the husband and wife that, in my view, the two companies in fact operated as one business (in fact their website bears no mention of the two separate companies) and that both should be VAT registered. They were extremely concerned at this and stated that they had only ever formed the companies on advice given by their current (chartered) accountant as the business grew - essentially to legitimately avoid VAT registartion. I advised that they should obtain written clarification of the position from the current accountant as, I felt, it seemed an obvious instance of VAT evasion.
Subsequently I have been forwarded by the husband a letter he has received from the current accountant. In that he confirms his advice as correct in that as there are two companies involved, each with separate director, shareholders, bank accounts etc, HM Revenue & Customs would definitely not regard them as one business - and therefore not registrable.
As a consequence of the "definitive" advice now received from the (chartered) accountant the husband and wife have decided to stay with him rather than move to us - on the basis that he cannot be wrong........
My query I suppose is really to ascertain if I am correct in advising as I did (and as a consequence lost a client to a potentially negligent competitor) and, if I am, do I have any reporting obligations under the money laundering regulations?