Director of two ltd one vat reg one not

[razzles]

Hi

I am currently a director of a ltd company which is below vat turnover, soon I should be directorof another company that is vat reg. By association do I now have to reg the first company for VAT?

[elainec100@cheapaccounting]

depends ....

Do not avoid registering for VAT by artificially separating business activities

If you run more than one business the sales in all those businesses must normally be added together to determine whether or not you must register for VAT.
However, if you are involved in the running of several separate legal entities, you may not need to combine the sales of those businesses to find whether you need to be VAT-registered.
If HMRC decides that you have artificially separated one business into smaller parts to avoid registering for VAT, it can decide that the entire business is a single taxable person and therefore must be registered for VAT. See the description of 'taxable person' in the section in this guide on who can and can't register for VAT.
Situations that HMRC may consider a single taxable person for VAT purposes include:


Separate entities selling to registered and unregistered customers. The VAT-registered entity sells only to VAT-registered customers, and the entity not registered for VAT sells to customers who are not registered for VAT.
The same equipment or premises being used by different entities on a regular basis. The premises and/or equipment are owned by one of the parties, who charges rent to the others. This situation may occur in businesses such as launderettes and takeaway food operations.
Splitting up what is usually a single sale. This is common in industries such the bed and breakfast trade, where one business supplies the bed and another the breakfast.

If you deliberately avoid registering for VAT, you may be liable to a penalty. For serious offences, the matter will be investigated and you may be prosecuted.


from here:


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

[razzles]

Hi

Thankks for the reply.
The two businesses are in businesses completely different industries (one jewellery and one cars) and have both been trading for many years. My wife is the director of the first company could I resign as director and just leave my wife as director or would that still be classed as association. I do not want to register the first one for vat only selling to retail non reg customers.
Thanks.

[elainec100@cheapaccounting]

As long as you meet the rules then there will be no problem. Are you still a shareholder?

[razzles]

Hi

Yes I will be shareholder in both.