Sole trader separation of business for VAT

Sole trader separation of business for VAT

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I have a client who is essentially a sole trader.

On the one hand he is an artist (oil paintings) and he paints and sells his pictures via a local gallery (he pays them a commission % on each sale).

On the other hand he is also a landscape gardener the rest of the time

If the 2 businesses combined had a turnover exceeding 81,000 would he need to register for VAT or are the businesses so different that he could argue they are separate businesses.

Replies (11)

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By johngroganjga
14th Jan 2015 15:12

How separate the businesses are doesn't come into it.  It's who owns them.  As he owns them both they are counted as one for VAT purposes.  Now if he put the landscape gardening business into a company that would be different.

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RLI
By lionofludesch
14th Jan 2015 15:14

Wife

Does he have a wife ?

Especially if she can dig a bit ?

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By johngroganjga
14th Jan 2015 15:37

Yes wife becoming a partner is the other way of separating the businesses for VAT purposes.

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Portia profile image
By Portia Nina Levin
14th Jan 2015 16:16

Alternatively

Can she hold a canvas still for long periods of time?

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Replying to paul.benny:
paddle steamer
By DJKL
14th Jan 2015 16:59

Or even just....

Portia Nina Levin wrote:

Can she hold a canvas still for long periods of time?

Or even just sit still for long periods of time

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By anneaccountant
16th Jan 2015 19:14

Thank you guys,,great feedback.

It seems then that if the 2 businesses are set up as separate entities, say a limited company on one hand for the landscaping and sole trader for the art business then it will be difficult for HMRC to then challenge this separation and try aggregate the businsesses in terms of the 81,000 VAT threshhold  

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By User deleted
17th Jan 2015 08:57

Very easy for HMRC to challenge

Even easier to send them packing, based on the information provided. Now, what is all this nonsense about being sued?

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By anneaccountant
17th Jan 2015 10:30

At the moment the client is below the VAT threshold even if both businesses are combined. 

The landscape business turnover is about 25,000 pa and the sole trader artist business is about 30,000 pa.

I just want to give best advice going forward.

Reading John and Basil's posts my understanding would be that if the landscaping business was put into a limited company and the artists remained sole trader then they should be viewed as separate for VAT especially as the 2 types of business are so different.

Why does Tilly think it would be bad advice and easy for HMRC to challenge?

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By User deleted
17th Jan 2015 10:50

Because ...

... Tilly doesn't know what s/he is talking about.

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Replying to kevinringer:
RLI
By lionofludesch
17th Jan 2015 11:01

Yes

BKD wrote:

... Tilly doesn't know what s/he is talking about.

That's about the size of it.

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By arthurallan
17th Jan 2015 20:00

Good advice Basil .. thank you

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