VAT registration - two seperate businesses

VAT registration - two seperate businesses

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Client is a partner in a horticulture business that is VAT registered. The indivdual (not the partnership) has now started a bookeeping business as a sole trader (it takes alll sorts).

I rang HMRC advice line to confirm that as bookeeping is an unrelated trade then the individual would not need to account for VAT pn the sole trader business until such time as it's turnover crossed the VAT registration threshold. The advice line agreed

I subsequnetly mentioned this to a colleague who believes that as the partner is already a person registered for VAT then the sole trader business should account for VAT on their bookeeping activities.

Can anyone help point to legislation that confirms one way or the other please?

nigel simmons

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By AnonymousUser
22nd Dec 2006 13:11

Probably ...
no registration required.

A partnership is a separate legal entity for VAT purposes, (in Scotland, a separate legal entity for other purposes as well). As such, it is the partnership that is registered, not the individual partners. Therefore, unless disaggregation provisions were to apply, there should be no need for the sole trader to register (subject of course to the limits applying to his own business)

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By AnonymousUser
28th Dec 2006 11:52

Notice 700/1 & guidance at V1-28 apply.
1. Colleague is probably wrong. You appear to have 2 separate entities. Individual & partnership.

2. Disaggreagation (artificial splitting of the business) is unlikely to apply. Pointers where it might apply is if the other partner(s) in the horticultural business were nominal - with little or no control / investment. If it does apply,then your colleague is right.

3. The two different typesof business are irrelevant for VAT, but are again a good indication that one business has not been artificially split.

4. NAS gave advice, hopefully based on your asking a question and giving HMRC all the facts in clear English. Ensure that you have a record of this call and the reference no. on your client file.

5. Legislation is clearly laid out in VATA94 and VAT regs. However, you may also wish to look at HMRC notice 700/1 and also in their internal guidance in volume V1-28. Both can be found from the library section of the HMRC web site.

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