Partnerships and VAT threshold

[Paddymcc]

Im looking to find out some information before i meet my accountant next week.

Im considering scaling back the business to make it more profitable however turnover will still be over the VAT threshold.

If i were to take on a family member as a partnership am i correct in thinking that i can effectively double the VAT threshold to circa £140k before having to register for VAT?

And lastly is it ok in HMRC eyes to split profits between partners for example 75% one partner and 25% the other?

[MyAccountantOnline]

If i were to take on a family member as a partnership am i correct in thinking that i can effectively double the VAT threshold to circa £140k before having to register for VAT?


No - sadly not:)



And lastly is it ok in HMRC eyes to split profits between partners for example 75% one partner and 25% the other?

Yes

[Paddymcc]

Ah ok im only allowed 70k allowance then per entity?

[spidersong]

Yes the £68K rolling 12 month turnover refers to all supplies made by a single entity.

And just in case this is the next question: If you take an existing business and split it to form a sole proprietor business and a partnership business, so that the sole propietor has a £65K turnover and the partnership has a £65K turnover, then HMRC will take a dim view on this and can issue a direction stating that it's really only one business and force you to account accordingly.

This is only where the split is to avoid VAT registration for one or both entities and if there was a genuine commercial reason for the split, and both entities can fully operate seperately then they can accept that one or other company doesn't need to be registered.

[elainec100@cheapaccounting]

see this link:

http://www.hmrc.gov.uk/vat/start/register/when-to-register.htm#7