Late vat registration and new location failure.

Late vat registration and new location failure.

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Ltd co have taken on a new premises / outlet in April basically selling the same service.

I have mentioned a few times that they will have to register when it is certain that the VAT threshold is going to be broken. As they were setting this up they had fallen way behind on their paperwork and thus difficult to verify if nearer to the threshold. I think partly this is increased workload for the owner but I think they are reluctant to register for VAT.

Anyway the new outlet hasn't worked and they are now confirming that sales will fall. Eventually the paperwork arrived this week and I am now up to date and they have breached the threshold in July by about £1k and by £3k in August. Should they register for VAT or can they send a letter stating temporary breach of threshold with a decent reason.

If they decide to go for a new outlet can they avoid breaching the threshold and artificial separation by setting up a second company in a differnt geographical location. I know ths would create all sorts of additional costs and work. Is it possible if they tweaked the services slightly that they could legally do this.

I'am sure the owner mentioned that similar business with more than one outlet don't register for vat(taken with a pinch of salt down the pub) and if they had to increase their fees to cover the additional vat then they wouldn't be competitive and would lose clients. They sell their services to the public.

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David Winch
By David Winch
12th Sep 2013 21:21

Just to be clear, you are saying that total gross income of the company for the period 1 August 2012 to 31 July 2013 exceeded the VAT threshold by £1k, whereas total gross income of the company for the period 1 September 2012 to 31 August 2013 exceeded the threshold by £3k.

So we conclude that gross income in August 2013 was £2k more than in August 2012.  Yes?

David

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Euan's picture
By Euan MacLennan
13th Sep 2013 10:35

Are you saying ...

... that a company already providing a service has taken on additional premises, so that there are now two outlets selling the same service?

How can they afford two premises if their combined turnover is only £80,000 a year?

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By Marky
13th Sep 2013 14:15

The taxable turnover  in the

The taxable turnover  in the 12 month period is £80,000 to July 2013. In August 2013 the turnover rises to £82,000.

 

The company rent the premises / hall and supply a service to the public. The second outlet was up and running in April 2013 but it hasn't worked out and the company will be finsihing with the landlord. So is this a reasonable reason to write to HMRC stating that the sales are now over the threshold but this will fall due to operating in one location.

 

On the other question if they find another suiitable location to supply their service, can they keep the two companies apart if the service offering was slightly different.

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