Crosswords2 mins ago
Do I charge VAT on this?
13 Answers
Thanks for reading. I am about to start importing garden furniture from Germany to sell here in the UK. I have a VAT registered business, but this is an entirely separate venture, and has nothing to do with my existing (wooden flooring) business. It is just a small venture - to begin with anyway.
Do I have to charge VAT when I sell these items on?
Do I have to register for VAT?
Many thanks
Do I have to charge VAT when I sell these items on?
Do I have to register for VAT?
Many thanks
Answers
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Assuming that your existing business is not a separate limited company and that you are therefore a sole trader, you should bear in mind that it is the person who is registered and not the individual businesses. You could therefore have half a dozen businesses in your name which could all be totally separate ie a pub, a shop, a furniture business, and all these activities will need to be returned on the one VAT return that you receive each quarter.
Ok... I have a bit more info now - from an accountant who does work Saturdays!
Apparently, if I set up a separate company - either partnership or sole trader, which has nothing to do with my existing company, I can charge no VAT, BUT if the VAT office suspect any link with the existing company, they can insist it is still part of the VAT registered company. The Accountant is checking those 'links' now, but it could even be as small a link as trading address, phone number, name of Director/Partner... The VAT office don't like people having multiple companies... Might be the easiest option just to do it through the existing company and pay the VAT - which means charging more money!
Apparently, if I set up a separate company - either partnership or sole trader, which has nothing to do with my existing company, I can charge no VAT, BUT if the VAT office suspect any link with the existing company, they can insist it is still part of the VAT registered company. The Accountant is checking those 'links' now, but it could even be as small a link as trading address, phone number, name of Director/Partner... The VAT office don't like people having multiple companies... Might be the easiest option just to do it through the existing company and pay the VAT - which means charging more money!
See here for HMRC advice on imports and VAT. http://www.hmrc.gov.uk/vat/int-imports.htm#1
The separation of trades between different business entities is known as disaggregation and is something that HMRC are always on the look-out for. Your accountant is right; the separation must be total if you're to have one business registered and one not.
The separation of trades between different business entities is known as disaggregation and is something that HMRC are always on the look-out for. Your accountant is right; the separation must be total if you're to have one business registered and one not.
Customs are usually concerned about businesses artificially splitting the trade to avoid VAT registration (e.g. a pub splitting the food, accomadation and fdrinks into seperate businesses). The best approach is to explain the situation to your local HMRC and get an opinion - you don't want to charge VAT unnecessarily, but it would be worse to get a late registration penalty and an assessment of VAT
If you are presently a sole trader in yoru other business and the new business is also going to be a sole trader then it can be as "separate" as you like, as Alcan said in the first post you'd still have to charge VAT as it is YOU who is registered. The accountant you spoke to should also have told you that.
However, if you start this one as a partnership (perhaps with a wife?), or as a separate limited company, or if your existing business is a limited company then these would be separate entities for VAT purposes and you wouldn't be obliged to charge VAT unless it needs to be registered itself due to its turnover. I don't have to hand the turnover figure at which you have to register for VAT these days but it's probably about �60k or so.
However, if you start this one as a partnership (perhaps with a wife?), or as a separate limited company, or if your existing business is a limited company then these would be separate entities for VAT purposes and you wouldn't be obliged to charge VAT unless it needs to be registered itself due to its turnover. I don't have to hand the turnover figure at which you have to register for VAT these days but it's probably about �60k or so.
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