VAT liability question

[mikerocky]

Hello, UKBF virgin poster looking forward to getting involved!

My question relates to whether I would need to go VAT registered if one of my company structures changes.

Presently I am a sole trader under the VAT threshold &
Am a 50% shareholder in limited company that is VAT registered.

Currently my sole trader business doesn't need to be VAT registered because of the ltd company being a separate entity. My partner in the Ltd company wants to close the company and startup another as an LLP. Now because the LLP has no tax liabilities the partner does, will that mean the income i take out of the LLP will add onto my soletrader income and push me over the VAT limit? Or can the LLP income and VAT still be treated as totally separate from my sole trader business?

^ hope I've explained that clearly if not please ask any questions.

Thx Mike

 

[Scalloway]

If you mean that LLP income will be your share of the LLP profits that is not counted as part of your income for VAT purposes.

 

[mikerocky]

Hello Scalloway, yes I mean the profits I take out from the LLP. I was concerned that this would add onto my sole trader income to push that over the VAT threshold - great news if it doesn't! thx

 

[Truemanbrown]

A sole trader and a LLP are two separate entities, so the income will not be combined when ascertaining whether you are forced to register for VAT because you have topped the exemption level.

 

[Bob]

Can we assume that the businesses are not associated in any way? If there is any connection, however loose, between the two businesses you will need to ensure that the VAT disaggregation rules do not apply. Useful article with examples here

 

[Williams lester]

Why would you be wanting to close a limited company and start an LLP, have you taken advice from your accountant on these matters?