A few sole trader tax questions

[Lord Flashheart]

I'm a sole trader tradesman with a van. I'm also not VAT registered and trying to avoid it like the plague. I have one bank account which has worked well for me for 25 years. I'm now thinking of perhaps running another separate business to top up the income but don't want it to affect my VAT status. Question 1: Is it as simple as starting a new sole trader business, that's not related to my current one, with its own name and bank account to avoid me personally becoming VAT registered? Or would that business need to be limited to separate me financially?
I'm not looking for the second business to become huge or anything, but mainly something I can do that's less strenuous than my current work. I do use sub contractors already and could potentially get off the tools and replace myself with another sub contractor. I'm thinking I'd like to make use of my fleet of personal vehicles so they earn their keep, doing whatever suits the vehicle. i.e I have very nice black Macan with pale grey leather, a new black iPace with red leather, a vintage Rolls and a Transit van. They all could serve their purpose from 'man with a van', through executive travel, to weddings and events.
With that in mind, the new iPace just set me back £83k, some of which I'd like to off set against tax; even for my current business. I know it's hard to justify that car for an 'on the tools' business, but I do generally go to clients to quote in a car rather than the van. Can I put some of the purchase/finance up against my tax for that?

[Simpo Two]

As a sole trader it's you that assessed for VAT, not the 'business' as you and it are the same thing. Hence you'd need to form a limited company for one of the activities .

Re the car, my understanding is that you can have one car for business (ie to offset) and it can be anything you like. But ask an accountant to be sure.

[Eric Mc]

Even starting a new business under a separate limited company may not get you off the VAT hook. HMRC do not like what they call "disaggregration" where a person deliberately sets up separate entities in order to ensure one or more of their activities remain under the VAT registration threshold.

[Vincecj]

Perhaps set up two Ltd Co's. As long as there isn't a crossover in the type of work, it shouldn't be a problem. Best speak to an accountant.

[ARHarh]

Or pay your taxes, just a thought

[DavidY]

ARHarh said:

Or pay your taxes, just a thought

VAT isn't a Tax you pay, its a tax you collect on behalf of HMRC and pass onto them.

[RowanF]

Isn't it fairly likely that as a sole trader approaching the VAT threshold (or over it?!) that being a Ltd Co might be more tax efficient anyway? Speak to an accountant.

[Lord Flashheart]

ARHarh said:

Or pay your taxes, just a thought

What's the problem with trying to avoid VAT registration?

I work for the public in their homes and can tell you that if I have to put 20% on my jobs, I will probably lose most of my work. On average it will add £1000 -£1500 extra for absolutely no gain whatsoever to the customer.

As for paying my tax, I always have been 100% on time and honest about it. I don't take any cash at all and bank everything. However, that doesn't mean to say I don't want to reduce my tax bill where possible. I'd be a complete idiot not to make use of any above board reductions that are available.

[Eric Mc]

RowanF said:

Isn't it fairly likely that as a sole trader approaching the VAT threshold (or over it?!) that being a Ltd Co might be more tax efficient anyway?

Not always - and increasingly less so.

[Simpo Two]

Lord Flashheart said:

ARHarh said:

Or pay your taxes, just a thought

What's the problem with trying to avoid VAT registration?

I work for the public in their homes and can tell you that if I have to put 20% on my jobs, I will probably lose most of my work. On average it will add £1000 -£1500 extra for absolutely no gain whatsoever to the customer.

The main benefit of VAT registration is (1) if you buy in a lot of stuff (2) your customers are also registered. Then you're laughing. But if you're a fee-based business selling to the public, you're knackered.