Diversifying?

[Troll]

Mrs Mustang is looking at the possibility of setting up a company/franchise to provide swimming instruction. Ultimately she will set this up as a seperate company but in the meantime we were talking about her establishing it as part of MyCo and using MyCo funds to make initial investments.

What is the best way of going about this so that it could become a seperate business?

Would I have to notify Co House that the class of business has changed?

All advice welcome.

Also won't Mrs Mustang have to do Risk Assesments and submit to kiddie fiddling background check thingy

[Mustang]

I'm very anti this - when the young trolls were learning to swim the local lifeguards used to teach them while I went off to do my lengths..along came a company who provided swimming lessons, lifeguards were issued a letter by the council telling them to stop giving lessons and the fecking swimming company demanded one of the lanes be reserved for their exclusive use !

Plus once the operation was up and running they didn't have enough teachers to cope with demand!

I wasn't sure about councils rights to grant exclusive monopolies for public amenities

Mrs Mustang is using private pools, primarily due to the age group she will teach and the fact the pools have to therefore be at 30 degC.

[Mustang]

Also won't Mrs Mustang have to do Risk Assesments and submit to kiddie fiddling background check thingy

Yes and Yes

Those are two seperate issues and unconnected to the original post! They will have to be done whether it is a seperate LTD or not!!

[Troll]

Yes and Yes

Those are two seperate issues and unconnected to the original post! They will have to be done whether it is a seperate LTD or not!!

Yes but most posts go off on tangents... didn't want this one to be any different

[Mustang]

Mrs Mustang will have to charge VAT from day one if Mr Mustangs business is registered and she's trading as part of it. For a B2C company this means needlessly high prices for the customer and trading at a disadvantage compared to one-man band coaches.

Agreed - that is certainly in favour of having a seperate LTD

Also if Mrs Mustang has set up costs (eg. publicity) and purchases capital items (training equipment) then she will be able to get all or most of the VAT back if she's eventually has to register for VAT, if she's a separate company, and can set most of these against profits.

Doesn't this apply in both scenarios? i.e. if she is part of MyCo, MyCO can claim the VAT back and offset them against profit.

You need to see the artificial separation rules which HMRC use, to determine if the businesses are close enough to warrant coming under one VAT umbrella.

I will certainly read up on these.

Bottom line: We will talk to my accountant before I make a final decision - I was just seeing the panel's opinion.

[Troll]

Mrs Mustang is using private pools, primarily due to the age group she will teach and the fact the pools have to therefore be at 30 degC.

How much does it cost to rent a private pool? will the pool insurance cover her activities?

Also back to the original point - when I setup another un-related company but wanted to finance out of existing company, accountant said to record it as consultancy fees

[Mustang]

How much does it cost to rent a private pool? will the pool insurance cover her activities?

It varies - anything from £10 to £20 per hour. If it doesn't she will get her own insurance.

when I setup another un-related company but wanted to finance out of existing company, accountant said to record it as consultancy fees

Thanks for the tip. At the end of the day it doesnt make a difference to me. I want to ensure I do it the easiest and most tax eficient way.

[oraclesmith]

Doesn't this apply in both scenarios? i.e. if she is part of MyCo, MyCO can claim the VAT back and offset them against profit.

It depends on MyCo's situation. It's my understanding that a newly registered company can reclaim VAT (goods 3 years prior to registration, services 6 months). If MyCo has been registered for VAT and trading for a long time and is on flat rate scheme then no chance of reclaiming VAT on Mrs Mustangs purchases. In my opinion.


Also there are first year capital allowances against corp tax that Mrs Mustang may miss out on if her business is just an additional business activity of your firm. You should really see an accountant because there are many variables involved, including how HMRC regard the split between activities.