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• # 82306
• Wed 25 Apr 2012 07:00 PM

I understand if a person has more than 1 business, it is the person who is responsible for VAT - not the company - ie if the combined amount of both companies meet the VAT threshold then they need to register.

What if a person is a sole trader in one company and Ltd company in another company.  Is the turnover combined here too?

My friend is in this position and her accountant says she only needs to register for VAT if one of her companies reaches threshold, not the combined total of both companies.

As this is not my understanding I wondered if the difference was because one company is Ltd and the other ST. 

Also... my client has 2 businesses as a sole trader.  He is nowhere near the threshold but has voluntary registered for VAT.

If I complete his VAT return, do I complete 2 separate returns... or 1 return with both businesses figures combined on it?



Many thanks
Paula  

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• # 82308
• Wed 25 Apr 2012 08:10 PM

Yes Paula your assumption is correct. A company is a separate legal entity and therefore would not be considered under the Vat registration of a sole trader, as you have rightly said the registration is valid for all businesses run by an individual (or indeed a partnership or a company) and the threshold takes account of all his turnover across all his businesses, however he draws up his accounts.

Your client as a sole trader should record both businesses under the one VAT return if both businesses are run only by him. If one business was run as a partnership, the partnership could register under a different VAT number or not at all. You do have to be careful with this though as there are rules regarding artificial separation of trades especially if you have similar businesses managed in different structures and it appears the structures are such to avoid paying VAT eg a farm run by a husband and wife partnership registered for VAT and a B&B run using the farmhouse but run only by the wife and not registered for VAT claiming a separate business.

I hope your client has zero rated products in both businesses to make the voluntary registration worthwhile!

Best regards

Georgina

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• # 82320
• Thu 26 Apr 2012 08:02 AM

Where a person is a sole trader, then it is the person who is VAT registered. All of their sole trades are covered by that. They complete one VAT return.


However, a person is a completely separate legal entity to a company. So a person can be VAT registered, but not the company that they are a shareholder/director of or vice versa. Or a person can be a shareholder/director of 2 companies, one of which is VAT registered and one of which isn't (although you have to be careful that the separate businesses haven't been artificially separated to avoid VAT).

You might find it helpful to read this: 

http://www.hmrc.gov.uk/vat/start/register/groups.htm

     

• Ruth
  www.shoreaccounting.co.uk

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• # 82323
• Thu 26 Apr 2012 09:02 AM

Georginasaid:

“

I hope your client has zero rated products in both businesses to make the voluntary registration worthwhile!

 

”

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

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• # 82324
• Thu 26 Apr 2012 09:26 AM

Thank you everyone, this has been extremely helpful.

Kind Regards

paula

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• # 82347
• Thu 26 Apr 2012 07:59 PM

kjmccullochsaid:

“Georginasaid:

“

I hope your client has zero rated products in both businesses to make the voluntary registration worthwhile!

 

”

---

I just really wanted to point out before anyone gets confused that this is not the only reason one would voluntarily register for VAT.  They may supply goods and services to vat registered entities rather than the general public for instance.  Or they may wish to provide services to a local authority who's technology requires a supplier to be VAT register (Crazy but true!)

Kris ”

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