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bigduckontax
bigduckontax, Accountant
Category: Tax
Satisfied Customers: 3813
Experience:  FCCA FCMA CGMA ACIS
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Please can you advise I run two independent businesses

Customer Question

Please can you advise
I run two independent businesses both in the name of myself and my wife
One of my business supplies ********* ********services full stop.
The other business provides and sells sport equipment and clothing and printing
Some of the business for the sports equipment business is sold to and on behalf of the ******** ********** company
However it should be noted that the majority of the business sells to other parties such as a non profit completely different entity football youth club (I am the chairman) and a completely different hockey club along with other various printing activities. Furthermore the business is now looking to expand with other dance companies and sporting clubs.
This business was originally set up to provide this service as our ******* *********** company used to source it from other retailers elsewhere, as did the football club and hockey club. It was a new business set up with new bank accounts and a new business name in order to look to grow and establish itself.
As it is now growing we need to consider the VAT taxable income. Please can you advise as I own both businesses along with my wife would it be considered as 'vat avoidance' in other words could they consider it as a related business
Obviously I personally do not consider it as the same business and the type of service it provides is completely different. But as I own both and my coaching business appoints it to supply kit to customers I would like to clarify the situation.
Submitted: 1 year ago.
Category: Tax
Customer: replied 1 year ago.
Slightly misworded. On behalf of the coaching company'.It should read. it's sells kit to customers so they can wear their company's training kit.Ie. A shop selling a Manchester city kit to a customer to wear.
Expert:  bigduckontax replied 1 year ago.
********* ********** is exempt from VAT providing that it is supplied by an 'eligible body.' In basic terms to be such a body it must be non-profit making. It is covered in VAT Notice 701/45 which you can read about here:
https://www.gov.uk/government/publications/vat-notice-70145-sport/vat-notice-70145-sport
The other business would be liable to VAT if the turnover (aggregate of standard, reduced and zero rated, but not exempt supplies) reaches or approaches the VAT Threshold, currently 82K. Should this happen you should register for the tax, render quarterly returns and charge customers the tax at the standard rate, 20%. You will need to issue VAT invoices with each sale. You will, of course, be able to recover any input tax charged by your suppliers.
On the face of it I cannot see any likelihood of VAT avoidance, but would suggest it a good idea to maintain separate books of account to be absolutely sure. Alternatively you might like to consider setting up two limited companies to completely separate the businesses.
I do hope that I have been able to shed some light on your situation.

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