Is this income splitting?
Client has approcahed me who is a sole trader selling his own services as a go-kart trainer to individuals as well as selling go-kart spares and stock to individuals and companies.
His business turnover has now reached the VAT threshold and is conscious of the effect that a 20% increase will have on his business in relation to the training income as his customers are mainly individuals.
So he has come up with the idea of splitting his business into a sole trader side which sells training and a Ltd Company which sells stock and spares.
I have mentioned to him that income splitting to avoid registering for VAT isnt allowable but I am equally unsure as to whether the 2 businesses are so distinct as to be 2 seperate entities in the manner in which they trade that income splitting wouldnt be an issue here.
Can anyone advise?