Discussion
Can someone please confirm my thinking is correct here;
Current business turnover for the last 12 months: £79,000
Other income: £4,500
If I register the business as a Ltd company that should separate the two incomes meaning that I'll have an extra £4,500 growth in the business (before I need to register for VAT) and also means I won't have to pay VAT on the £4,500 of self employed income.
Is this correct? I asked my accountant about it last week but they were under the impression that I would still need to pay VAT on the self employed income when the business went Ltd.
Current business turnover for the last 12 months: £79,000
Other income: £4,500
If I register the business as a Ltd company that should separate the two incomes meaning that I'll have an extra £4,500 growth in the business (before I need to register for VAT) and also means I won't have to pay VAT on the £4,500 of self employed income.
Is this correct? I asked my accountant about it last week but they were under the impression that I would still need to pay VAT on the self employed income when the business went Ltd.
Separating streams of incomes between different trading entities (limited company, sole tradership, partnership etc) CAN ensure that some or all of the entities never exceed the VAT registration threshold (currently £85,000 but likely to go down in the future, not up).
HOWEVER, if there is any link whatsoever between the trading activities HMRC will argue that the trader is trying to "disaggregate" (i.e. break up) their business activities just so they can keep out of VAT - and that is not allowed.
You have to be very careful if you do intend to keep the activities segregated
HOWEVER, if there is any link whatsoever between the trading activities HMRC will argue that the trader is trying to "disaggregate" (i.e. break up) their business activities just so they can keep out of VAT - and that is not allowed.
You have to be very careful if you do intend to keep the activities segregated
Eric Mc said:
Separating streams of incomes between different trading entities (limited company, sole tradership, partnership etc) CAN ensure that some or all of the entities never exceed the VAT registration threshold (currently £85,000 but likely to go down in the future, not up).
HOWEVER, if there is any link whatsoever between the trading activities HMRC will argue that the trader is trying to "disaggregate" (i.e. break up) their business activities just so they can keep out of VAT - and that is not allowed.
You have to be very careful if you do intend to keep the activities segregated
Thanks Eric. HOWEVER, if there is any link whatsoever between the trading activities HMRC will argue that the trader is trying to "disaggregate" (i.e. break up) their business activities just so they can keep out of VAT - and that is not allowed.
You have to be very careful if you do intend to keep the activities segregated
They are totally separate and there is no way someone could argue that they are linked.
Still can’t understand where the accountant was coming from, she is supposedly their ‘VAT expert’ too.
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