VAT registration and turnover threshold

**Flubster** · 21 February 2007, 12:24

Originally posted by DimPrawn

However my co is nearing the 60K ish limit.

Nearing? What are you...a tape changer?

**Mustang** · 21 February 2007, 13:35

Ever thought of creating a group of companies? Nokia4U, Sony4U and Motorola4U would be all part of the group.

Something to investigate - dont take my word for it!!!

**Tool** · 21 February 2007, 14:29

Originally posted by DimPrawn

Hyperthetical question.

Say my customers are joe public and hence being VAT registered makes my co 17.5% more expensive for them. Also the goods or services I sell do not allow me to claim much VAT back, so being registered is a bad thing.

However my co is nearing the 60K ish limit.

It is not necessarily a bad thing. You will most probably be elligible for the Flat Rate Scheme. You invoice with VAT, so 17.5% more, and only pay back to the VAT man 13%. You can't claim back VAT on any expenses, but this is apparently not a problem for you.
This is a very easy way to make a few extra quids.

**XLMonkey** · 21 February 2007, 14:38

It could work, but creating lots of smaller companies will give you a fair amount of administration - not sure whether the saving that you make through being ex-VAT would be enough to justify the cost and hassle of keeping multiple companies.

As Tool said, if your VATable expenses are very low, then you might be as well off registering on the flat rate system and getting the (limited) benefit that it offers you.

Its a bit of a bugger all round though, VAT is the price you pay for yourco being successful

**VectraMan** · 21 February 2007, 14:38

What happens if one particular area suddenly takes off? It might be difficult to divide that business up into smaller companies quickly enough to avoid reaching the VAT limit.

I guess there's nothing wrong in principle, but in practice it could quickly become more hassle than it's worth.

**oraclesmith** · 21 February 2007, 14:42

Originally posted by DimPrawn

Hyperthetical question.

Say my customers are joe public and hence being VAT registered makes my co 17.5% more expensive for them. Also the goods or services I sell do not allow me to claim much VAT back, so being registered is a bad thing.

However my co is nearing the 60K ish limit.

What is to stop me creating two (or even 100) limited companies, each specialising in one particular product or service?

E.g. If I sell mobile phones to punters, creating Nokia 4 U ltd, Sony 4U ltd, Motorola 4U ltd, etc

In this way each company is under the VAT limit.

Thoughts and comments please.

This is covered by the Artificial separation of business activities HMRC statement of practise. See section 14 of this link.

http://customs.hmrc.gov.uk/channelsP...086#P510_57488

**DimPrawn** · 21 February 2007, 14:58

Originally posted by Flubster

Nearing? What are you...a tape changer?

This is my Plan B company which trades on the Internet.

My IT contracting company is already VAT registered and is WELL over the VAT limit.

**DimPrawn** · 21 February 2007, 15:00

Originally posted by XLMonkey

It could work, but creating lots of smaller companies will give you a fair amount of administration - not sure whether the saving that you make through being ex-VAT would be enough to justify the cost and hassle of keeping multiple companies.

As Tool said, if your VATable expenses are very low, then you might be as well off registering on the flat rate system and getting the (limited) benefit that it offers you.

Its a bit of a bugger all round though, VAT is the price you pay for yourco being successful

You are all missing the point.

If my Internet trading company becomes VAT registered, my prices to joe public go up 17.5%

**DimPrawn** · 21 February 2007, 15:01

Originally posted by oraclesmith

This is covered by the Artificial separation of business activities HMRC statement of practise. See section 14 of this link.

http://customs.hmrc.gov.uk/channelsP...086#P510_57488

Thanks - That a spot on answer.

VAT registration and turnover threshold