Sole trader and limited company together??

[GoodwinElec]

Hi guys happy easter to all!
I have a sole trader based electrical company non vat registered not limited. I plan to start tendering for larger housing jobs but would want this to be limited and vat registered, can I use the limited vat registered company for larger jobs and keep my sole trader business for my regular clients (residential domestic work such as re-wires, fuse boards changes etc)
Is that a thing??
the sole trader business turns over £70-85k per year so doesn't warrant vat and limited and costs involved with that.

 

[StevensOnln1]

You can't artificially separate a business to avoid registering for VAT, which is what you would be doing by providing the same service through a separate limited company.

 

[GoodwinElec]

You can't artificially separate a business to avoid registering for VAT, which is what you would be doing by providing the same service through a separate limited company.

its not to avoid vat. I didnt say or imply that. could register for vat for both as an umbrella then trade separately as an when larger jobs and contracts come in. ?

 

[StevensOnln1]

What would be the point in having the two separate businesses? You'd save on admin by running it all under the limited company.

 

[GoodwinElec]

Because the time from securing a job to receiving my first payment could be 6 months to a year or more so I don’t want to be vat registered until I’m sure things will go to plan. Bit larger Companies won’t work with me unless I’m limited etc.

 

[WaveJumper]

HM Revenue & Customs for obvious reasons are dubious about businesses being split especially where VAT is concerned, and on the face of it they appear to be one business only. If the HMRC think you have simply split your business down into two legal businesses but they effectively operate like one, share the same office for example, use the same tools & equipment, staff etc they can argue that it is one business for VAT purposes, so in short you are treading on various dangerous ground if you try to go down this route.

If it was completely two different types of business ie selling shoes on line and the other offering electrical services no problem, I am not an accountant (or tax advisor) but in your example I am sure it would be considered artificial separation, I would suggest speaking to your own accountant for advice.

 

[GoodwinElec]

Ok, would be good to not charge my small customers vat as I’d loose so many jobs until I know the larger contracting works will be a success.
Guess I could register once I receive my first large payment?

 

[WaveJumper]

Its great your doing well and thinking big, for whats its worth, and I say this as one who has seen many contractors trying to chase the big contracts (i used to manage very large commercial property portfolios) I feel there comes a point where you have to take the leap its not just about being VAT registered but having all your bases covered ie the dreaded H&S paper work, the relevant approved electrical certification docs, insurance etc. If not you will not get your foot in the door.

Get all your "systems' in place first, be confident and then go for it, the works out there for the right people. The very best of luck.

 

[GoodwinElec]

Its great your doing well and thinking big, for whats its worth, and I say this as one who has seen many contractors trying to chase the big contracts (i used to manage very large commercial property portfolios) I feel there comes a point where you have to take the leap its not just about being VAT registered but having all your bases covered ie the dreaded H&S paper work, the relevant approved electrical certification docs, insurance etc. If not you will not get your foot in the door.

Get all your "systems' in place first, be confident and then go for it, the works out there for the right people. The very best of luck.

Yea thank you. I am in the process of getting all the relevant and required systems in place. That’s why I’m not rushing to be vat registered yet as it could be a year before I receive any Payments.

I plan to start locally on smaller 1-10 house developments and go up from there.