VAT - artifical separation

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(totally unrelated to my other VAT question this morning).

If a partnership is VAT registered, does it follow that by default the individual partners are?

H+W partnership need to register (t/o £120k), H is also a sole trader (t/o £30k). He'd prefer not to be.

Related question: if partnership t/o was £80k and s/e t/o £80k, would neither have to register?

Thanks

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By Wanderer
22nd Mar 2021 09:08

1. No.
2. Yes.

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Replying to Wanderer:
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By Paul Crowley
22nd Mar 2021 09:10

+1

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VAT
By Jason Croke
22nd Mar 2021 09:23

It is possible to be a sole trader and a separate partnership, they are two different persons for VAT purposes. You could also have two different partnerships as long as they have a different composition* (ie, Partnership 1 = husband and wife, Partnership 2 = husband and wife and daughter).
*exception for Scottish partnerships

But artificial separation is a different topic. Whether you have 3x limited companies or a sole trader + partnership + limited company, the disaggregation rules are always in play.

In your scenario, it depends what sole trader "H" does which will determine if their £30k income should be included in the partnership turnover or not and you need to apply the 3 conditions HMRC use for artificial separation - organisational, economic and financial links.

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Replying to Jason Croke:
ALISK
By atleastisoundknowledgable...
22nd Mar 2021 10:02

Thanks Jason, I appreciate that I was getting my terms mixed - artificial separation is a consideration int his case, which I suspect we might fail.

P/ship = general plumber
S/e = underfloor heating.

Currently same email address and both trades use the same bank account in his personal name.

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Replying to atleastisoundknowledgable...:
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By Wanderer
22nd Mar 2021 12:05

atleastisoundknowledgable... wrote:

Currently same email address and both trades use the same bank account in his personal name.

This really isn't a good idea.
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