Quick Vat query

[Jamiecool]

Lets say for example an individual was employed paying PAYE at around 50k a year. They then set up a ltd company as a side line turning over 40k... would they register for VAT ? Not my situation but was looking into something and this crossed my mind.

Edited by Jamiecool on Tuesday 15th May 22:28

[CaptainSlow]

Jamiecool said:

Lets say for example an individual was employed paying PAYE at around 50k a year. They then set up a ltd company as a side line turning over 40k... would they register for VAT ?

They might.

[Mr Pointy]

It might depend on what the business does. Is there a lot of input VAT (will you be buying stuff in) or is it mainly just selling your time?

[PurpleMoonlight]

A turnover of £40,000 does not require mandatory VAT registration but they may voluntarily register.

The PAYE income is irrelevant.

[Jamiecool]

Thanks guys,

The question was more aimed at an individuals total earnings, so if they are pulling in 50k and also turning over 40K in the business then exceeding a total amount of VAT threshold. I kinda guessed the two entities would be completely different.

Reason I ask is I have a competitor who I think is doing just this, and stealing the odd job from us. I could be wrong I guess but it was a question that got me curious.

[akirk]

Jamiecool said:

Thanks guys,

The question was more aimed at an individuals total earnings, so if they are pulling in 50k and also turning over 40K in the business then exceeding a total amount of VAT threshold. I kinda guessed the two entities would be completely different.

Reason I ask is I have a competitor who I think is doing just this, and stealing the odd job from us. I could be wrong I guess but it was a question that got me curious.

A ltd company is its own 'individual' or identity - so if he is working paye for someone else and then has his own ltd company - that is two totally separate companies the company employing him paye and then his own - the fact that he works for both is irrelevant - presumably he doesn't own the company paying him paye?

[Eric Mc]

Would he be providing services to just one customer and that customer happens to also be his employer?

If so. HMRC might be more interested ion a "disguised employment" situation rather than VAT matters.