New branches as separate companies - false separation?

[firework]

Hello

I have a company which serves the domestic market. I would like to set up branches in various locations, I intend for these branches to be formed as separate companies. The operator of each branch will be a non-voting share holder in their branch company, able to receive dividends. The directors of each branch will be the same. Each branch would have separate advertising, accounts and customers, but all bookings would be done at a central office, which would organise the day to day work and other administration.

As far as my accountant and I are concerned this is legitimate and not a sham to avoid VAT registration. However, I am interested to find out what others think.Does it matter that all the branches will share a logo, main website and central booking office?

I am slightly more concerned that the first of these branches is going to be very close to the original branch, in fact taking over much of the original branches customers. The new branch does have non-voting share holders (the operator) that the original does not.

The purpose of having the separate companies is that I want each branch to be a business in its own right and each operator to have a stake in their branch. However, I am anxious that the VAT inspectors claim I am just trying to avoid VAT registration and that it is false separation.

Any advise would be appreciated.



Thank you

 

[MyAccountantOnline]

Your accountant will have a lot more background information that anyone here so really is the best person to be advising you. I am assuming he has confirmed all advice given to you in writing?

Have you considered getting a written advance approval from HMRC?

 

[firework]

Thanks

I like the idea of written approval from hmrc

Is the advantage of having it in writing from my accountant that he would be in some way liable if things went wrong?

 

[MyAccountantOnline]

Thanks

I like the idea of written approval from hmrc

I would certainly speak with your accountant about this.

Is the advantage of having it in writing from my accountant that he would be in some way liable if things went wrong?

It's certainly considered very good practice - it greatly reduces any risk of misunderstanding for both parties and yes, ultimately if necessary can be used as evidence if a claim is ever needed.

You may find in your letter of engagement it contains reference to relying on advice do check it to see what it says - it may well state you should only rely on written advice.