Short term holiday lettings - separate for VAT?

Is it enough to put one of the two into a limited company for the STHL to be considered separate?

Didn't find your answer?

My client owns two short term holiday lettings, each of them having a turnover of £60k. 

One of them is owned directly and the second one is owned over a limited company. 

Can the two businesses be considered separate for VAT threshold? What would be additional criteria to be considered?

would any of the following matter?

- whether he owns 100% or 99% only in the limited company?

- whether the account on Airbnb are separate?

- whether the two businesses have separate websites? If not, could there be argued that the limited company acts as agency for the privately owned?

- what other criteria would matter? 

Replies (7)

Please login or register to join the discussion.

avatar
By Accountant A
07th Oct 2018 11:56

If you are an adviser, you need to refer your client to someone conversant with VAT.

If you are the property owner, you need to instruct an accountant.

Thanks (0)
chips_at_mattersey
By Les Howard
07th Oct 2018 20:33

Two properties 'controlled' by one person, so HMRC likely to treat as single taxable person.
The client's arrangement is vulnerable to challenge.

Thanks (0)
avatar
By nickpick
07th Oct 2018 22:49

I’m not sure it’s that simple. I’ve been told that the key point is that HMRC needs to prove that the two businesses have ‘financial, organisational and economic links’. The important word is ‘and’. HMRC must prove all three links: one or two out of three is not good enough.

The question is still, how does this have to be interpreted in the above case I discribed.

Thanks (0)
Replying to nickpick:
RLI
By lionofludesch
08th Oct 2018 08:12

nickpick wrote:

I’m not sure it’s that simple. I’ve been told that the key point is that HMRC needs to prove that the two businesses have ‘financial, organisational and economic links’. The important word is ‘and’. HMRC must prove all three links: one or two out of three is not good enough.

The question is still, how does this have to be interpreted in the above case I described.

Looks to me like you've decided what the answer is and you're looking for the evidence to prove it.

Which is the wrong way round.

A lot of people have tried this in the past. The problem is that a point comes where they can't be bothered to keep the businesses separate and take some short-cut, leading to disaster.

Thanks (0)
Replying to lionofludesch:
avatar
By nickpick
08th Oct 2018 09:24

Half the people say yes if done properly, the other half say no way. It’s very confusing indeed.

Thanks (0)
Replying to nickpick:
RLI
By lionofludesch
08th Oct 2018 10:50

The "if" is why the other half say "no way".

Thanks (0)
avatar
By Tax Dragon
08th Oct 2018 06:33

I know it's old, and not the same scenario, but your reading https://www.accountingweb.co.uk/any-answers/forming-a-second-ltd-company... might save us typing time.

Thanks (0)