Hi, hopefully someone can guide me with this as I'm getting myself confused.
I have been a sole trader clinical aesthetician for a number of years, operating out of a small clinic - fulltime. The turnover has been under the VAT registration threshold. There has been very little profit in this to date as the start up costs, training, equipment etc has been quite high and customer footfall low, but I foresee this will change over the coming years. 3 years ago I bought a beauty salon and this business was set up as a limited company. Aside from being the Director, this company has its own Manager and staff and is self sufficient - the trade is classic beauty - nails, spray tans, waxing etc. This business is VAT registered and profitable. Recently my one room clinic for my skin business lease needed renewing, and because the footfall in the area of this business is far less than the beauty salon, and the beauty salon is large and has multiple rooms for rent - I decided to "rent a room". I have set up the appropriate contract documentation between the 2 businesses, as I have for other sole traders that have rented rooms (such as a Doctor and a Perm Make Up artist). The skin business and the beauty business are separate entities - I personally do not work across both businesses in terms off the treatment offering. There is no cross over with the therapists. I operate from one room and I work fulltime in skin. The treatments, equipment and supplies and completely separate. The beauty side is managed by the Mangager and the Therapists and offer completely different treatments. For practicalities, we share a reception, room booking system, sundries such as tea and coffee for clients, waste disposal, overheads etc and my treatments have been added to the brochure, website and and booking app. To the public this all comes across under the banner of one branded business. This is no different to the facilities provided to the other sole traders and detailed in the terms in the contract and included in the costs. We are all joined.
However after reading a few things I am a bit concerned. Because I am Director of the VAT registered beauty business and operating as sole trader not VAT registered - will I need to combine these as one and pay VAT on all treatments offered at that premise? My main reason for not just combining the businesses now I have moved is that ultimately I may sell off the beauty business which would not include skin, myself or the equipment so I wish to keep them as separate entities. Am I ok to do this and if so, what should I do to make sure I would withstand audit from HMRC?
Any help much appreicated.