Two businesses, Can one be registered for vat and not the other?

Hi,

I was hoping someone could help me,

I am a sole trader and not vat registered because turnover is below threshold for vat.

Now I have decided to register a partnership in different business to run along side, my question is:

Can i register this new partnership for vat without affecting status of sole trader registration?

Any help would be appreciated

Regards

A registered partnership has its own tax number, and is distinct from you as a sole trader. One business can be vat-registered and the other not.

Are they two different trades/business activities?

Hi,

No, they are quite similar in that they are both services of the same nature but would be targeting much different sectors. i.e the existing one be for small jobs for householders and the new one aimed at corporate and commercial areas and on a much larger scale.

hope that makes sense

Hi,

They would be basically the same type of service but would be aimed at totally different markets Existing business is aimed at small jobs for householders and the other at corporate and commercial markets.

I would say providing you can distinguish between fully between the 2 trades then there should be no problem.

However where there is going to be some trade-off between the 2 businesses (especially where the VAT-registered one starts doing small jobs) then it will be more difficult to prove that they are 2 separate trades.

Otherwise somebody could just keep setting up limited companies infinito in order to stay under the VAT threshold, which I don't think Revenue appreciate.

Section 8(3)(e) VATA72 provides for an “anti-fragmentation” rule where connected persons make supplies of goods or services of the same class. This helps ensure that group companies etc cannot artificially avoid VAT registration.
The anti-fragmentation rule works as follows:
Where there are two persons and one exercises controls over the other or both are under common control the combined turnover of their supplies is deemed to be the turnover of each for the application of the registration thresholds.

This is to avoid setting up two separate trades where one trade sells to the public and remains unregistered for VAT and the other trade is B2B and registers for VAT, claiming all the VAT inputs. Or you could have 2 trades selling to the general public and splitting their turnover to remain below the VAT registration threshold.

DB74'S Post +1

Revenue have covered nearly every base on the anti frag rule except that there is an advantage to new businesses and businesses that operate below the threashold when supplying to businesses such as property management companies that can not reclaim vat.

It has been a bug bear of mine for sometime.