2 Businesses, 2 People & the VAT Threshold

[Skiny]

Hi,

I just have a question regarding 2 businesses with two people and the VAT threshold.

I have been running a small business on eBay for the past couple of years, and have kept my turn over under the VAT threshold.

Anyway, my brother would like to do some selling too, however due to a dispute that happened with Paypal years ago, he is no longer allowed to use eBay, and had asked to use my account.

My question is, would that be a problem for the VAT and the threshold? I would add a seperate bank account in his name to receive money, but the actual eBay account would still be in my name.

Thanks

 

[EnhanceAccountancy]

Hi Skiny,

I'm not sure what the Ebay stance on this is. I would expect that each person would need their own ebay account.

In terms of HMRC considerations regarding the VAT threshold you may be considered to be in a partnership when your brother starts to trade. It all depends on the businesses' and both individual's circumstances.
If you are deemed to be in a partnership rather than two separate sole-trade businesses then your combined sales will have to be included when comparing against the VAT registration threshold.

See the "Should I be registered for VAT?" guidance on the HMRC website for more information on artificial separation of businesses.Pay particular attention to Section 13.5:
Artificially separated businesses which maintain the appearance of a single business

(sorry I can't post URLs on here yet)

I hope it helps,

Gareth

 

[David Griffiths]

Too risky in my opinion

Why use your account? Can't he get somebody else to open an ebay account and use that? It's probably a breach of Ebays rules anyway.

As Gareth says there is a risk that the Revenue would regard it as a partnership. It's a fight that you might or might not win, but why get into it in the first place?

 

[akirk]

if there was a dispute and ebay no longer wants him as a customer - if they find out they will ban your account - worth the risk?

Alasdair

 

[David Griffiths]

if there was a dispute and ebay no longer wants him as a customer - if they find out they will ban your account - worth the risk?

Alasdair

Not to mention the fact that whatever he did to get banned might get repeated on your account!