Diversifying a company and accounting - split or not?

[JustinP1]

All responses appreciated although this might be one for Eric!

Cheers for your help before, I've now developed the idea further.

We currently record and manufacture CDs for clients. We're on the flat rate VAT scheme under 'other manufacturing' and the right percentage for that, and when we were inspected years ago they were all OK with this.

We're now going to import a container of instruments, and sell these. I am thinking that the best way forward is to start a new Ltd Co to deal with this as the type of business will be different.

If I keep this under the current Ltd Co, I would guess I would have to essentially run a separate account for the 'retail' business anyway, to account for the 'retail' VAT as the flat rate is different, and thus pay two different flat rates?

If I make a new Ltd Co, that would simplify things as the new company would be on standard VAT.

However, if I did that, are there any additional accounting requirements, apart from of course accounting the companies as entirely separate entities?

I seem to remember one of the reporting requirements on either the Companies House or HMRC CT600 submissions was that one of the simpler reporting methods was not available if the company was part of a 'group'. Is this right?

Cheers in advance!

[Eric Mc]

You shouldn't have tax matters dictating business direction.

There are special rules for Flat Rate VAT when there is more than one trade type applicable. You need to be really careful.