Vat business split

[DanBous]

So I do tree work, stump grinding and fencing. Im not vat registered (yet!) I'm looking at buying a remote tracked grinder...about 6 grand of Vat on it. My question is can I run the grinding as a separate concern and be vat registered, whilst not being vat registered for trees and fencing??

[Squaredy]

13 minutes ago, DanBous said:

 

So I do tree work, stump grinding and fencing. Im not vat registered (yet!) I'm looking at buying a remote tracked grinder...about 6 grand of Vat on it. My question is can I run the grinding as a separate concern and be vat registered, whilst not being vat registered for trees and fencing??

 

Good question and really an accountant needs to answer this. The short answer is this could be very dodgy.  If HMRC think you are in effect splitting one business so you can have your cake and eat it they could land you with a big bill for back tax.

[Mark Bolam]

Technically, yes.

There is no crossover allowed though, not just of kit, but of business premises, admin facilities etc.

The VAT man has been all over this one for years.

I think if you went grinding in the morning and did some fencing in the afternoon even wearing the same pants they would have you.

[Steve Bullman]

Why wouldn’t you want to he vat registered for fencing?

[DanBous]

Well I think I would lose work if I went vat registered on trees and fencing...or I would have to cut my rates.
I would like to be vat registered across the board, I have done a lot of investment in the last two or three years, and could claim thousands back [emoji16]
But what if I lost customers?!

[Steve Bullman]

Surely you are losing out more when purchasing fencing materials than if you were vat registered?

[arboriculturist]

You can if you wish - however it's just not worth it as to comply:

 

No 'artificial' separation allowed.

Partnership required for one of the  businesses.

Separate bank account.

Separate set of accounts.

Separate advertising etc.

Cannot use the same equipment for both both businesses unless you Invoice 1 business for say use of vehicle e.g. 1 day hire inc. fuel. £ 90.

Etc Etc

 

 

[DanBous]

Surely you are losing out more when purchasing fencing materials than if you were vat registered?

I guess I hadn't thought of that...I suppose I could invoice customer for materials without VAT (as I can claim that back??) and invoice for labour with VAT...often my fencing jobs are similar proportions of labour and materials so I guess the customer would actually be paying about the same?

[Steve Bullman]

Nope, you can't do that...you always have to invoice for the vat unless you are selling a zero rated item

[DanBous]

So I invoice for labour and materials plus vat, then annually claim back vat from materials?