VAT on consultancy

[George Smiley]

I'm employed (I work for 16 hrs a week) but I also a director of 3 different companies whose main activities are business consulting.

I have non EU clients who would pay me for my services but of late some want me to buy them some equipments from UK. I understand there's a VAT element. But how can I claim VAT while I'm not VAT registered? Is it advisable to register for VAT for all 3 companies or just one company? ( the holding company which owns majority of the shares of the other 2 companies).

Will this VAT arrangement complicate by other job?

Kindly advise.

 

[john1989]

If you are not VAT registered you cannot reclaim input VAT.

If you register for VAT, you may have to charge VAT on some of your other sales such as sales made within the UK. Will this impact your business in any way?

 

[George Smiley]

Based on the current arrangement so are you advising that its better to register for VAT?

 

[kevin.doran]

Will this VAT arrangement complicate by other job?

I'd say the arrangement was complicated long before that when deciding to form 3 different companies. Are they REALLY needed?

 

[George Smiley]

I dont see any complications having 3 different companies because they do different things (none of them has done much trading).

My only concern is the place where I'm employed.

 

[john1989]

Based on the current arrangement so are you advising that its better to register for VAT?

I'm not advising either way. I'm not in a position to do so with such little information available.

I was merely pointing out a couple of things. Your accountant would be in a better position to say if you should or shouldn't register for VAT.

 

[kevin.doran]

VAT has no impact on your employment.

Registering one company for VAT and not the other two would only cause an issue if the other two were of a similar trade to the first. If that were the case, HMRC might argue you've separated them artificially for VAT purposes There's a good write up on the subject here by David.

 

[George Smiley]

VAT has no impact on your employment.

Registering one company for VAT and not the other two would only cause an issue if the other two were of a similar trade to the first. If that were the case, HMRC might argue you've separated them artificially for VAT purposes There's a good write up on the subject here by David.

Thanks for the link.

So HMRC would be happy if all 3 companies were VAT registered even though two of those would not qualify for VAT threshold?

Or to be on a safer side and avoid ambiguity or being accused of artificially separated them for VAT purposes I can register all 3 companies for VAT.

I really don't mind as long as the VAT thing doesn't affect my employment elsewhere

 

[john1989]

HMRC wouldn't be happy, nor would they be sad.
You can voluntarily register for VAT at any time. Whether it is beneficial to do so is the real question here.

VAT registration will have no impact on your employment. Owning a business might do though if that is a restriction set out in your contract of employment by your employer.

 

[David Griffiths]

Based on the current arrangement so are you advising that its better to register for VAT?

There isn't anything like enough information provided to enable anybody to give any meaningful advice one way or the other. You really should take professional advice from somebody who can have all of the relevant facts

 

[George Smiley]

I guess I will have to register all 3 for VAT just to be on a safer side

 

[john1989]

Or take appropriate advice...