Flat rate scheme - definition of 'associated'

Flat rate scheme - definition of 'associated'

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I have a VAT registered client whom we are considering moving onto Flat Rate.

Approximately 80% of the turnover is generated from one client, with whom they also share an office.  The office share is simply for convenience, my client is not reliant on their office space to operate the business, she could do it from anywhere.

The remaining 20% is from completely unconnected parties. 

Client is a sole trader, there is no commonality of ownership between the two.

Looking at the criterion:

  • one business is under the dominant influence of another - not really
  • two businesses are closely bound by financial, economic and organisational links or - no organisational links, only financial links on a commercial basis
  • another company has the right to give directions to you - no
  • in practice your company habitually complies with the directions of another. The test here is a test of the commercial reality rather than of the legal form. - again, only on normal commercial terms as it would comply with the directions of any client.

I think on balance they are not 'associated'.  Would people concur?

Thanks in advance.

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By Tonykelly
03rd Nov 2012 11:33

really straightforward

based on the information supplied, these 2 businesses are clearly not associated.

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By Sarah P
05th Nov 2012 14:19

Thank you

Always nice to have a second opinion, especially if it concurs :-)

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