separating a business

[Unicornchris]

Have a question regarding a public house. Could the landlord (VAT registered-sole trader) rent his kitchen out to his wife (sole trader) so then her takings (which would be less than £70,00 and under VAT threshold) wouldn't be liable to VAT?? Or would HMRC think it is a bit dodgy??
Obviously they would have to have separate accounts, would they need separate tills, insurance, etc...
Thanks

 

[Rhodes100]

I think you will find that HMRC have thought about this and have rules against it.

 

[elaine@cheapaccounting]

Read here ...

Do not avoid registering for VAT by artificially separating business activities



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

 

[JulianHobbs]

There isnt really enough information in the original post to determine why the business is being split. What is the wife's business, why is it separate to the main public house business etc?

However, in the absence of further information, it sounds like this could be an artificial business splitting exercise designed to obtain VAT advantage. The risk associated with this can be significant: it is possible for HMRC to claim that there only ever was one person operating as a business right from the start, and can issue an assessment for lost VAT going all the way back. Needless to say, this could be a devestating bill.

You really should get any such arrangement reviewed by an accountant before embarking on such a plan

Julian Hobbs
Chartered Accountant

 

[MyAccountantOnline]

Have a question regarding a public house. Could the landlord (VAT registered-sole trader) rent his kitchen out to his wife (sole trader) so then her takings (which would be less than £70,00 and under VAT threshold) wouldn't be liable to VAT?? Or would HMRC think it is a bit dodgy??
Obviously they would have to have separate accounts, would they need separate tills, insurance, etc...
Thanks

It wont work - its artificial seperation of a business to avoid VAT. The pub scenario is the classic one used as an example.

Here's a link to the HMRC website with some further information which may be helpful - http://customs.hmrc.gov.uk/channels...CE_CL_000086&propertyType=document#P556_61743

 

[MyAccountantOnline]

It wont work - its artificial seperation of a business to avoid VAT. The pub scenario is the classic one used as an example.

Here's a link to the HMRC website with some further information which may be helpful - http://customs.hmrc.gov.uk/channels...CE_CL_000086&propertyType=document#P556_61743

Whoops just realised Elaine posted the same link:redface:

Great minds.....

 

[Unicornchris]

Thanks a lot everyone for the threads, advice..etc
Much appreciated