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Great article Marie
Whats your opinion on a limited company (sole trader sole director and shareholder) setting up a seperate business to the existing sole trader business, would this pass the financially, economically and organisationally argumnet
The same rules would apply, so just by having a Limited Company (even though it is a separate entity) would not exempt vat registration.
Are you sure jj?
Are you saying that 2 separate ltd coy's under common control can't have separate vat registrations?
Pffft........so, J Bloggs (Building) Ltd and J Bloggs (Repairs) Ltd. Both owned and run by same person.
(Building) Ltd turnover is £200k and is vat registered.
(Repairs) Ltd turnover is £50k and is not vat registered.
The above structure is ignored and HMRC would aggregate turnover for vat purposes.
IS THAT WHAT YOU ARE SAYING JJ?
The question was:- If a sole trader traded as a sole trader and a ltd company, would the fact that the sole trader was trading as a limited company make any difference. I pointed out that the fact that just because there is a limited company involved, that mere essence of having a limited company would not make any difference to the rules.
Let's look at your scenario. J Bloggs building Ltd charges J Bloggs repairs Ltd for whatever. J Bloggs repairs has to pay the vat:- sounds good business sense to me.
Where ownership is one person customs will always seek to amalgamate, although if two ltd companies are both owned by the same person and both vat registered any transaction between to two are vat exempt.
Sorry jj..i really don't understand your latest post.
I'm not talking about the vat status of any inter-company trading (??)
Anyway, i think i'll leave it. Wish i hadn't bothered with the original comment.
My point about the Blogg's was a bit of banter.
A normal person cannot split their income into bits for vat purposes (Unless vat exempt trades). Nor can Limited Companies. However if you are a 50% shareholder (not with your wife) in a vat reg Ltd co. you can have a ltd co under your own name 100% shareholder (say turnover £50K) without registering. You could still get a challenge from Customs though. In Blogg's scenario customs would look to VAT reg both companies.
I am afraid that Mr Harra is really gullible if he believes what he has been told about small self employed traders and landlords by advisers who have absolutely no knowledge or experience of these people.
Apart from the unnecessary and onerous burden being imposed, I am horrified by the assumption that the whole system will be operational in 18 and a half months from now.
The consultation isn't closed until late November and systems have to be specified, designed and tested.
Us agents have to review every case, advise our clients of their new responsibilities and then agree who will (or will not) be dealing with various aspects. There will be a change to our workload, the timing thereof and staffing requirements.
In addition, we, and/or clients will have to acquire the necessary software. As at today, no software has been approved by HMRC and we don't know when it will.
And all this will be in place by April 6 2018? I doubt it.
I would get on my hands and knees and beg Mr Harra to think again and particularly:
Delay by another year
Start with VAT registered businesses
Leave the smallest cases until last.
If this is left to happen on the proposed timescale, I predict that Mr Harra will have to carry the can for an unmitigated disaster.
You really want to make sure people see your post don't you Leon. Have you put this on every thread?
The Grand Folkestone v HMRC is what you need 27 pages of which 21 argues whether it is or not business splitting .
Its also on page 21 of ICAEW taxline June edition
FTT said it was one entity was the result
read the Grand Folkestone Hotel v HMRC case
27 pages of which 21 is on business splitting
read the Grand Folkestone Hotel v HMRC case
27 pages of which 21 is on business splitting
good article Marie,
i also think you can separate the company from the shareholder to have the most benefits
One really simple tweak would be to automatically turn on agent authorisation when an agent applies to register the client for taxes. With a new limited company for example we will typically register them for PAYE, VAT and notify HMRC that they have started trading for CT in one go, but still we have to separately register for OAA.
Also, we are part of the Beta testing for PAYE and for a handful of clients we only have limited access (including for our own company!) although we have always applied for OAA in the same way, never with a FBI2. Another gripe with that trial is that CIS isn't automatically included with PAYE although they are so integrated.
It does need some sort of client approval but if we could register for full access to all the taxes using the UTR and the client gets a code to BLOCK access if they so wish to be used within say 7 days before access is activated, the whole process would go more smoothly.
I had one client (who we subsequently fired!) who had a second-hand goods business. He wanted to split the ground floor and first floor of his premises into separate businesses to keep them below the VAT threshold.