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VAT Registered

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1 hour ago, Rough Hewn said:


Nope.
3 separate sites with their own kit and staff.
Each a limited company.
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But here you say they are limited already.........

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7 hours ago, Retired Climber said:

Haha, the very definition of artificial separation. 

Perhaps.  But not if it's done properly.  There are of course plenty of mills that just mill, tree firms that just do trees, timber merchants that just sell timber, firewood people that just do firewood.  That is, the precedent is well set for these being legitimately different businesses.

 

Granted, you would risk having to convince the Revenue that splitting up an existing business was done for commercial or operational reasons rather than merely avoidance of VAT registration but that is do-able.  Sound accountancy advice as most have said is key though...

 

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10 hours ago, Steve Bullman said:

This!

 

I can never understand the mentality of people who desperately try and stay under the vat threshold in the mistaken notion that it means they will lose work if they register.

 

My mindset from the start was that if my business ambition was never to cross the threshold then why even be in business.

I do see what you mean Steve, but everyone has different ambitions.  Turnover is a poor measure of success (at least it can be).  If a small, well-run firm with manageable overheads can operate under the VAT threshold then a decent profit could still be made.  Interesting thread!

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8 minutes ago, Puffingbilly413 said:

Perhaps.  But not if it's done properly.  There are of course plenty of mills that just mill, tree firms that just do trees, timber merchants that just sell timber, firewood people that just do firewood.  That is, the precedent is well set for these being legitimately different businesses.

 

Granted, you would risk having to convince the Revenue that splitting up an existing business was done for commercial or operational reasons rather than merely avoidance of VAT registration but that is do-able.  Sound accountancy advice as most have said is key though...

 

Separation of business activities for the reason of avoiding VAT registration is THE definition of artificial separation, and is THE reason mentioned above. 

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1 minute ago, Retired Climber said:

Separation of business activities for the reason of avoiding VAT registration is THE definition of artificial separation, and is THE reason mentioned above. 

Well it's not the 'the' definition, it's HMRC's and they are not the law nor are they infallible.  But I wasn't really disputing that bit.  Rather I meant that running three separate businesses all under the threshold (trees, milling, timber sales) could be perfectly legit.  It's just how and why you arrive there.

 

Even if you were approaching the threshold, you could still have legitimate operational reasons for splitting up the firm.  Firewood takes time to process, timber takes time to mill.  If you're out doing tree work 5 days a week then you can't be doing the other two.  That's not to say you mightn't have avoidance of VAT registration as a motivation, but if you can successfully demonstrate operational/commercial reasons then it could still work fine.

 

It's a bit like the tick box on the tax self assessment forms where you're asked if you are involved in a tax avoidance scheme.  I wonder how many people actually tick to say yes.

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1 minute ago, Puffingbilly413 said:

Well it's not the 'the' definition, it's HMRC's and they are not the law nor are they infallible.  But I wasn't really disputing that bit.  Rather I meant that running three separate businesses all under the threshold (trees, milling, timber sales) could be perfectly legit.  It's just how and why you arrive there.

 

Even if you were approaching the threshold, you could still have legitimate operational reasons for splitting up the firm.  Firewood takes time to process, timber takes time to mill.  If you're out doing tree work 5 days a week then you can't be doing the other two.  That's not to say you mightn't have avoidance of VAT registration as a motivation, but if you can successfully demonstrate operational/commercial reasons then it could still work fine.

 

It's a bit like the tick box on the tax self assessment forms where you're asked if you are involved in a tax avoidance scheme.  I wonder how many people actually tick to say yes.

You are missing my point, he said the only reason he would split the business would be so that he didn't have to register for VAT. However you look at it, that's artificial separation. 

 

Anyway, I agree with all of your points, it's just that my point was based on one particular aspect of what had been said. 

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54 minutes ago, Rough Hewn said:

Retired climber, what was your business name when you were working?
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I sold the business to an employee and he's still running it. I'm not about to give the name of the business to someone on a forum looking for an argument. 

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