Two businesses and VAT - again
I recently saw a potential new client, husband and wife - operating as a driving school business.
Essentially the husband is the qualified instructor and the wife plays no part in the running of the business - other than "administratively". The business is divided in two and run by two limited companies, the shareholder and director of each being individually the husband and wife. Both companies thus come within the VAT registration threshold and consequently are not VAT registered.
I advised the husband and wife that, in my view, the two companies in fact operated as one business (in fact their website bears no mention of the two separate companies) and that both should be VAT registered. They were extremely concerned at this and stated that they had only ever formed the companies on advice given by their current (chartered) accountant as the business grew - essentially to legitimately avoid VAT registartion. I advised that they should obtain written clarification of the position from the current accountant as, I felt, it seemed an obvious instance of VAT evasion.
Subsequently I have been forwarded by the husband a letter he has received from the current accountant. In that he confirms his advice as correct in that as there are two companies involved, each with separate director, shareholders, bank accounts etc, HM Revenue & Customs would definitely not regard them as one business - and therefore not registrable.
As a consequence of the "definitive" advice now received from the (chartered) accountant the husband and wife have decided to stay with him rather than move to us - on the basis that he cannot be wrong........
My query I suppose is really to ascertain if I am correct in advising as I did (and as a consequence lost a client to a potentially negligent competitor) and, if I am, do I have any reporting obligations under the money laundering regulations?
- Increasing the personal allowance: A top priority? 504 19
- VAT, vans, sole traders and business use. 1,605 13
- Bereavment payment 108 3
- Double tax treaty Italy and UK 105 1
- Anyone Heard of This Outfit? 1,124 7
- Can anyone advise on the best VAT Scheme to change to? 277 4
- Apologies for reposting this but first post was on Friday afternoon! 356 2
- CT600 Computations - Company Tax Return help 1,299 14
- Sage Bank Reconciliation 158 2
- Companies House incorporation service 356 12
- Factors affecting tax charge FRS 19 (marginal rate) 83 1
- P35 and Service Company questions 157 3
- VAT chargeable to conference attendees 199 6
- Is Accountancy Becoming like an Insurance Policy 216 1
- Long period of account for Corporation Tax 275 7
- Flat Rate VAT and EU sales (Non VAT) 147 3
- NIC £2000 Allowance - Care Support Worker 157 3
- Share Capital 140 2
- Trading income or not? 204 1
- Charge HMRC 437 3
- Xtuple 550
- Qtac payroll for bureau 377
- Confused - Professional Association a Mutual trader, or not? 321
- Industrial & Provident Societies 315
- Why would HMRC offer to close an investigation by contract settlement 297
- CIS schemes 225
- Domain name sale and limited company 206
- Director legal fees in loose connection to the company 191
- Investment 188
- Italian friend wants to set up a UK company to reduce taxes 180