Hi there, so far ive been able to find out most answers to my questions by reading old threads but could do with some clarification on a point or two

I`m buying a much larger registered and approved business in the same industry as I`m in, but want to keep my existing status (ie under the VAT threashold, non appoved etc) for my existing customers, the plan was to set up a LTD company to "hold" my customers.

however after reading this on a different thread about VAT

there are rules about the artificial seperation of businesses

I`m wondering whever this would pass muster?



thanks in advance for any help



Saxondale
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I suppose the simple question to ask is whether this structure is a natural business progression or whether it is done for the purpose of avoiding VAT, and from what you write it seems to be clearly the latter. If you are expanding your business either by acquisition or organically, then when you cross the threshold, VAT becomes applicable.
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I suppose the simple question to ask is whether this structure is a natural business progression or whether it is done for the purpose of avoiding VAT, and from what you write it seems to be clearly the latter. If you are expanding your business either by acquisition or organically, then when you cross the threshold, VAT becomes applicable.

To be fair it`s more to do with the industry been divided into certified and non certified installations.

little of the kind of work we do needs regulatory approval and these are the jobs which generate high income, the rest is mainly small one off calls that together are way below the threshold.

probably the best example i can give would be a local car mechanic doing MOT testing

Would it not be seen that the part of the business issuing the certs is seperate to the part that changes the oil when the vehicle isn`t there for testing?
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probably the best example i can give would be a local car mechanic doing MOT testing

Would it not be seen that the part of the business issuing the certs is seperate to the part that changes the oil when the vehicle isn`t there for testing?

I really wouldn't want to argue that one with HMRC as it'd be my guess it's that sort of thing they would be looking out for.
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You're going to have to be more specific with regards your business and the one you intend to buy if you want specific advice.

Bottom line, if you are working in the same industry sector (gas fitter/electrician for instance) then HMRC will seek to know why you think two companies in the same industry/sectgor should be treated as seperate businesses for VAT purposes.

Two different sectors (hair dresser and fruit seller) is no problem but a car mechanic and an MOT centre are just too close to get away with it.
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okay thats fine, I can see the argument even if I dont agree with it (LOL)

what are the pros (and cons) of just transfering the existing VAT number?
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I take it that you mean take over the VAT number of the company that sells the business to you?

Upsides - can't think of a single one.

Downsides - if the VAT inspector finds that there's something wrong with the returns put in by the other company, they'll expect you to pay it. :eek:

Advice: DON'T DO IT! :p
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not that I am advocating it in any way, but might one upside be the "appearance" associated with an older VAT number - in the same way that people seem to like older company registration numbers ??
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