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TaxRobin
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Experience:  International tax
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How can I be sure I do not fall foul of the "artificial seperation"

Resolved Question:

how can I be sure I do not fall foul of the "artificial seperation" rules?
Submitted: 2 years ago.
Category: Tax
Expert:  TaxRobin replied 2 years ago.
Hello,HMRC advises that artificial separation happens when: The same businesses use the same equipment or premises regularlyThe business supplies both registered and unregistered customersA single supply is separated, for example one entity in a bed and breakfast supplies bed and the other breakfastArtificially separated businesses maintain the appearance of a single businessThe same person controls a number of businesses which make the same type of supply.Splitting a business in two so both fall under the threshold and so avoid registration is what you do not want to be your intent. Make certain that if the businesses have evident financial, economic and organisational links, they could exist without the other.
Customer: replied 2 years ago.

Yes I read as much on the guv.uk website. Let me explain more.

I currently run 2 businesses as a sole trader. a leaflet distribution company and a domestic cleaning company. For peace of mind to avoid insurance claims (one of my colleagues has just suffered such) I want to make the cleaning business a limited company.

I run both businesses myself from a home office using the same computer and same business address, different telephones, seperate bank accounts. One does not rely on the other for financial support in any way. Would this be acceptable?

Expert:  TaxRobin replied 2 years ago.
Yes. The businesses are not linked. The same computer and address are not enough to place you in a position for artificial separation.This is not the same as having one business and splitting it into 2 entities. They were separate from the beginning and offer different services.
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