Hi
Can anyone help me with the following
If there is 5 different Ltd Cos (all trading below but around the VAT threshold but controlled by the same shareholders) carrying out similar similar types of business activities in different fixed locations, would this be liable to a business splitting direction? If so and a HMRC discovery is not retrospective does this mean that the previous (taxable) sales/turnover is not liable to VAT.
Also what potential penalties is the above example exposed too and how would this penalty be calculated if the discovery is not retrospective.
As always thanking you in advance
Replies (3)
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Disaggregation
HMRC have two main options:
1 - assume all the sales were made by the same taxable person historically; insist on retrospective registration, with penalties, and probably a large assessment; or
2 - issue a Notice of Direction to aggregate the multiple companies into a single taxable person. But this can only apply from a current date. There is no Potential Lost Revenue so, in my view, no penalty.
The scenario you describe is called geograpic disaggregation. See HMRC comment here: http://www.hmrc.gov.uk/manuals/vatdsagmanual/VATDSAG05100.htm