Forum

• # 90701
• Thu 09 May 2013 10:31 AM

Dear Forum

I have a client who already runs one business as a sole trader. She is VAT registered for this business.

She is about to buy another franchised business which she will again operate as a sole trader. She is concerned that activity in this second business will fall under her existing VAT registration.

Am I right in thinking that multiple businesses run by the same sole trader (but which are completely separate) would be treated as separate businesses for VAT purposes?

Thanks, Moira

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• # 90706
• Thu 09 May 2013 01:36 PM

Dear Moria,
If the businesses are separate legal entities then they are not combined for VAT BUT if a link can be found between the businesses then yes they must be treated as the same business.

A good example is a bed and breakfast , you could not have the room boarding (bed) as one business and the breakfast as another. Take aways run from a restuarants would be the same business as the restuarant.

Hope this helps

Fiona 

• TaxClever - Supporting Individuals and Small Businesses in Kent
   
  www.taxclever.co.uk 
  
  
   

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• # 90757
• Fri 10 May 2013 07:01 PM

Here is something to think about.


It is the person not the business that is vat registered here is the guidance on it from HMRC http://www.hmrc.gov.uk/vat/start/register/groups.htm

If there were 2 Ltd companies with the same directors then there would be 2 registrations. Maybe call HMRC to get a decition on this one.


Have fun.

Peter
       

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• # 90761
• Fri 10 May 2013 09:42 PM

My understanding is the same as Peters.  It's the sole trader who is the registered person and the registration covers all business activity the person has.

Kris 

• Kris McCulloch
  www.ayrshireaccountancy.co.uk
  
  Winner - BKN Most Innovative Accountancy Firm 2012
  
  Latest Blog Post: Bookkeepers Award 2015

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• # 90766
• Sat 11 May 2013 09:53 AM

Peter and Kris,

You are both right it is the person(natural or legal) who is registered for VAT not the business but to check the legal or natural person you have to look at the legal entity of the business. So as Peter says in the case of two Ltd companies  
they may have different regisrations. However groups of companies can have just one. 

Fiona 

• TaxClever - Supporting Individuals and Small Businesses in Kent
   
  www.taxclever.co.uk 
  
  
   

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• # 90769
• Sat 11 May 2013 11:30 AM

A sole trader with more than one business;
the person is the taxable person, not the business.  The turnover of all businesses are combined for the VAT threshold.

Partnerships and Ltd are treated differently    

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• # 90770
• Sat 11 May 2013 04:57 PM

following on from this. If a sole trader has two or three entitely separate businesses eg if they are a photographer, florist, electrican, and writes books in their spare time, can they use the same business bank account, so as to make it easy for the self assessment? 


Kind regards


Lainy xxxx     

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• # 90782
• Sun 12 May 2013 04:25 PM

lainy


I would say in theory yes you could do this. I do for both my businesses, but the other one is commission based and has very little going through it just now.


With the mix you have suggested I probably would not do it and keep them seperate as it would not take much to combine them for a tax return.


It would also depend on the legal trading entities of the businesses.        


     

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• # 90798
• Mon 13 May 2013 11:39 AM

Thank you all for your answers.

I have actually spoken to HMRC and they confirmed that all business activity of a sole trader will be covered by the one registration.

This impacts on me personally as well as my client, as I run a yoga studio as well as a bookkeeping business, so if I were to continue both businesses as a sole trader and I were to register the bookkeeping business for VAT, I would also have to charge VAT on my yoga classes .

Sounds like a good reason to incorporate one or the other!

Moira

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