VAT Register question

[midlandnetworking]

Hi all

Quick question. I currently run an IT Support company as self employed. Im looking at setting up as a car trader. The auction house requires me to have a VAT number. What would the best option / possibility be?:

1) Turn the IT company into a Ltd company and VAT register it and trade the cars through this.

2) Setup a new VAT Registered company solely for trading cars.


My only thought on option 1 would be that I could gain more IT business if the company is Ltd and Vat registered as at the moment its quite small.


Thank you in advance.

[Ray Coman]

If HMRC discovers that you have artifically separated a business in order to keep one business below the registration threshold, then it will treat the business as a single taxable person for VAT purposes. On the face of it, since an IT support services and car dealership are distinct businesses they are not likely to be treated as combined for VAT purposes.

Whether you should register the IT business for VAT voluntarily depends on various factors, such as your client base, projected trunover, accounting system and the importance your clients attach to your business being VAT registered.

The decision to form a Ltd company could turn on more than simply tax considerations. The two business could be kept as separate companies to protect the credibility of one from the other.

I hope this helps