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bigduckontax
bigduckontax, Accountant
Category: UK Tax
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Experience:  FCCA FCMA CGMA ACIS
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Hi myself and my business partner are directors of a company

Customer Question

Hi myself and my business partner are directors of a company (salon) we set this up few years ago to rent out chairs. We both rent spaces along with 4 other stylists within the salon. All working independently from one another and using all own equipment and colours ect. All have own tills. We do share a pdq machine. The company s takings of rent is just under vat threshold and individually we all take under too. So my question to you is do you think all this stands up from a vat point of view?? My accountant says so but other accountant s say differently!!
Submitted: 8 months ago.
Category: UK Tax
Expert:  bigduckontax replied 8 months ago.
Hello, I'm Keith and happy to help you with your question.

I concur with your accountant, it stands up from a VAT stand point. Be cautious though. Special rules on registration apply as you approach the GBP 79,000 threshold. HMRC advise:

VAT registration threshold

If you're in business, you must register for VAT if your VAT taxable turnover for the previous 12 months is more than £79,000. This figure is known as the VAT registration threshold. The threshold changes - usually once a year announced in the Budget - so you should regularly check your turnover against the current threshold.

You must also register for VAT if either of the following applies:

You think your VAT taxable turnover may go over the threshold in the next 30 days alone

You take over a VAT-registered business as a going concern
Customer: replied 8 months ago.
Hi sorry bout the rating but the answer only really explained vat thresholds!!
That's not my question mark as of course I know what that is.
I need help in the fact of my set up, myself and my business partner and 4 others renting chairs from the company?? I need to know that if the vat man look at this it would be ok. Sorry if I didn't explain.
Expert:  bigduckontax replied 8 months ago.
I think it most unlikely, the days of VAT inspections are long gone. There is nothing wrong in the business scenario you set out. The company, a separate legal entity with maybe its own VAT registration, may certainly operate in this manner. If it is VAT registered then it must charge the tax on its rents received. Those individuals so charged may reclaim the VAT through their own VAT registrations. If they are not registered for the tax, of course, they cannot and have to bear it as a business expense.
bigduckontax, Accountant
Category: UK Tax
Satisfied Customers: 683
Experience: FCCA FCMA CGMA ACIS
bigduckontax and 2 other UK Tax Specialists are ready to help you
Customer: replied 8 months ago.
We are not vat registered as myself and my business partners taking as separate entity s are under vat threshold and the rent taken by our company are also under vat threshold. So if your getting full understanding you still think we are ok set up this way as far as Vat man not just thinking we're dodging paying vat??thanks John
Expert:  bigduckontax replied 8 months ago.

Yes, providing you are careful if yout turnover approaches the GBP 79,000 level as I explained.

Sorry for the delay John, travelling from the States to Scotland!

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