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bigduckontax
bigduckontax, Accountant
Category: Tax
Satisfied Customers: 4094
Experience:  FCCA FCMA CGMA ACIS
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My client is a sub contract bricklayer who works with 2 labourers

Customer Question

My client is a sub contract bricklayer who works with 2 labourers as a gang. He receives payment for the whole gang and shares it out in proportion. It is not registered as a partnership for tax purposes.
This has taken the gang over the VAT threshold and HMRC are saying it is a partnership & should be VAT Registered.
Many years ago I had a similar situation and argued that the receipient of the funds was acting asa an agent for the other 2 and as none of them individually went over the VAT threshold there was no need to register.
Can anyone advise if this is still the case?
Submitted: 3 years ago.
Category: Tax
Expert:  bigduckontax replied 3 years ago.
Hello, I'm Keith and happy to help you with your question.
Here is the definition of a partnership from e-conomic:
'A partnership is defined as two or more persons in business with a view to making profits; the number is ***** limited to a maximum of 20.'
On that basis I regret to have to concur with HMRC's stance on the matter. I can see your old argument; have you put that before the Vatman? If not, it might be a good idea to run it across HMRC and could clear your yardarm in this matter and the whole problem simply go away. VAT controls are, as you probably realise, being constantly revised to counter tax avoidance.