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Naiomie L Shean

Business vat????

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Naiomie L Shean

Just an enquiry.....to avoid the VAT threshold. Could I have a window cleaning business earning under 85k and my husband have a separate window cleaning business earning under 85k whilst both living at the same address?????
 
Many thanks in advance [emoji4][emoji4][emoji4]
 
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Green Pro Clean Ltd

Its the separation of businesses act.  

 

Rookie mistake.  HMRC will be all over you. 

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Part Timer

If you split the 2 business's and one is doing window's and one is doing gutters facias and is called maintenance you might have a chance. You will however risk an investigation if they look into it. If found guilty the fine will be substantial. 

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Green Pro Clean Ltd
12 hours ago, Part Timer said:

If you split the 2 business's and one is doing window's and one is doing gutters facias and is called maintenance you might have a chance. You will however risk an investigation if they look into it. If found guilty the fine will be substantial. 

NO CHANCE AT ALL

 

if you have a roof cleaning business and a window cleaning business yes, you can split as not many window cleaners clean roofs.  Same if something like carpet cleaning, not many windies get involved.  Very small percentage. 

 

However as a high percentage of windies do do soffits and fascias and gutter clearing then you wont get away with it.  HMRC look at 'industry standard'  so say the deduct 80% of us do fascias that's an 'industry standard' add on so they will consider it one and the same business. 

 

IF HOWEVER you want to risk it and try to 'get away' with tax evasion you WILL get caught and you will suffer massive fines plus back tax repayments plus possible loss of properties, vehicles tools, anything you cant prove you didnt pay tax on.  

 

OR you could quit being an Arthur Daly and plan for a smooth and easy transition moving forward and grow a reputable business successfully.  

 

DO not for a minute assume HMRC to be fools, the law is with them, it is on you to prove what you do and have done, they can simply guesstimate a number, send you a bill and there goes your world.  

 

Get an accountant and pay him to sort these things for you. 

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Part Timer
19 minutes ago, Green Pro Clean Ltd said:

NO CHANCE AT ALL

 

if you have a roof cleaning business and a window cleaning business yes, you can split as not many window cleaners clean roofs.  Same if something like carpet cleaning, not many windies get involved.  Very small percentage. 

 

However as a high percentage of windies do do soffits and fascias and gutter clearing then you wont get away with it.  HMRC look at 'industry standard'  so say the deduct 80% of us do fascias that's an 'industry standard' add on so they will consider it one and the same business. 

 

IF HOWEVER you want to risk it and try to 'get away' with tax evasion you WILL get caught and you will suffer massive fines plus back tax repayments plus possible loss of properties, vehicles tools, anything you cant prove you didnt pay tax on.  

 

OR you could quit being an Arthur Daly and plan for a smooth and easy transition moving forward and grow a reputable business successfully.  

 

DO not for a minute assume HMRC to be fools, the law is with them, it is on you to prove what you do and have done, they can simply guesstimate a number, send you a bill and there goes your world.  

 

Get an accountant and pay him to sort these things for you. 

I have quite a few friends that do this, in different industries, and have done so for years. One of whom is a painter and decorator that simply splits it between internal and external work. If they are currently trading as a partnership and then split it the chances are they will be caught. If they are currently trading as sole traders the risk will be lower. 

 

Personally I wouldn't risk it as the downside is to large,  

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Naiomie L Shean

Don't worry folks. We are NOT doing this. Was just asking a question as I am new to the whole vat thing and just wanted to know the do's and don'ts.

 

Thank you everyone for your input and advice. It is very much appreciated and I now have a better understanding of how it all works.

 

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scottish cleaning service

Does anyone know the Vat threshold? I was told it was £72k but not so sure. 

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P4dstar
Does anyone know the Vat threshold? I was told it was £72k but not so sure. 

£85K but if you tip that you need to drop below £82 for deregistration. The threshold increases every year the same as your personal tax allowance does


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scottish cleaning service

Just filled in my new business account registration with RBS. They don't even want you to go near the bank to do it. All has to be done online until its verified. 2 year free banking I am told and then the charges rush in or change bank and join the merry go round of corporate banking. 

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P4dstar
2 hours ago, scottish cleaning service said:

Just filled in my new business account registration with RBS. They don't even want you to go near the bank to do it. All has to be done online until its verified. 2 year free banking I am told and then the charges rush in or change bank and join the merry go round of corporate banking. 

Nah even easier, you make a phone call and threaten to cancel in 2 years time and they give you another year free 😉

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Dave Shaw

Surely a man and wife can run two separate businesses from the same house independently as long as they can prove they have their own client base and accounts. Me and the misses have been thinking about it as she’s now on mat leave with our third child and is a perfect opportunity to start her own domestic house cleaning business which would involve cleaning internal windows and is in direct relation to what I do(window cleaner). I’ve just found this interesting story which proves that it can and has been done in the eyes of the law.


The recent success that our Tax and VAT team experienced at the First Tier Tax Tribunal, in successfully appealing an HMRC decision requiring the clients to register for VAT as a partnership, has highlighted some important points for small businesses. The team managed to save our clients a belated notification penalty of £15,829 – much to their relief and an additional £150,000 (circa) for VAT assessments.

Peter Hastings comments “The case was based on HMRC’s belief that our clients had been carrying on one business in partnership, where as they contended they had each been carrying one separate business. We collated a considerable amount of evidence from our clients to rebut HMRC’s contention. The issue was whether Mr Belcher’s barbers shop was an independent business to Mrs Belcher’s ladies salon. They operated from the family home, but with the evidence given by our clients and the supporting documentation, the Tribunal accepted that our clients were both sole traders.

The HMRC staff guidance manual states – “Before you rule that a separated business is a single entity, you must confirm the trader’s intention when they organised the business”

We asked the investigators whether at any stage they had enquired about the intentions of Mr and Mrs Belcher regarding whether a single business was being run as a partnership or two business were being run by each of them respectively separately. Both officers replied that they had they had not asked Mr and Mrs Belcher about their intentions.

The fact that the various parties are related should not influence HMRC’s decision. Tribunal decisions have indicated that a wife can quite feasibly help her husband in his business (in her capacity as his wife) and still carry on her own business (in her capacity as a sole proprietor).

The manual also states: – “You should ask each individual to define the distinction between what they do in their business capacity and what they do to help out as a family member.’

The investigators were asked if they had followed this guidance in their questioning of Mr and Mrs Belcher. Both officers agreed that they had not done so.

Crucially, we applied the decision of the VAT and Duties Tribunal in the appeal of George Francis & Helen Francis [2006] V&DR 487; [2007] STI 388 and the recent decision of the Court of Justice of the European Union in Christine Nigl and others v Finanzamt Waldviertel (C-340/15).

We stressed that each business maintained a separate till, together with a separate ledger – HMRC had not taken these facts into account, nor that the profits of the two businesses were pooled and shared by them, as they were husband and wife living together, not simply joint owners of one business.

The relevance and significance of shared outgoings between our clients was also stressed. They may have had a single bank account together with a single trade account for purchases of consumables, but this must be considered in the context of their personal circumstances as husband and wife, and does not indicate a financial link in the operation of the businesses, as it might do if the owners of the business were not so intimately related.

Each business had its own staff, each business was responsible for its own staff, each business managed its own clients and that both Mr and Mrs Belcher made their own managerial and ownership decisions in relation his or her respective business.

The Tribunal accepted the points made and that Mr and Mrs Belcher carry on a separate economic activity and are a separate taxable person within the meaning of the Sixth VAT Directive and the Principal VAT Directive, and for the purposes of the Value Added Tax Act 1994.

Peter adds “Our clients were under a lot of stress but the collation of evidence, the way they presented their evidence and counsel (Marc Glover)’s attention to detail in his submissions supported by witness statements that were detailed and responded to each point resulted in the successful outcome. If you are in partnership, you really should have a Partnership Deed and ensure that you have had the correct VAT and Tax advice.”

If you would like to discuss aspects relating to this case or have a VAT dispute you wish to talk through you can contact Peter at ph@rogers-norton.co.uk or 01603 67639.

I’m gonna ring hmrc myself so I’ll keep this post updated as and when I do.


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Dave Shaw

Also I know loads of lads that are buying fancy pickups, plastering them in company graphics and putting them through the business as a commercial work vehicle and then letting their wife use them as the family vehicle. Obviously this is illegal in the eyes of the law but there’s no way of proving it and their accountants are even advising on it. I recently owned a high end Audi and the previous owner was a scaffolding firm. Why the hell would a scaffolding firm need an Audi rs4!!!!! Hmmmm.


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Dave Shaw

£85K but if you tip that you need to drop below £82 for deregistration. The threshold increases every year the same as your personal tax allowance does


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And it will keep increasing although there has been talk of getting rid of it all together. Really can’t see this happening as it will put a lot of people out of business and rather than payin their taxes they will be claiming benefits off the government and they won’t want that. Just the same as they will never stop giving away free houses and money to people the can’t be ar5ed gettin a job.


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Green Pro Clean Ltd

Where you need be careful @DaveShaw is in the accounts side of things.  

 

See, many domestic cleaners clean inside windows but not outside.  Many window cleaners clean outside but don't Hoover and do the dishes.  

 

If they argue you are the same business then you can reasonably argue against as you'd be hard pushed to find a window cleaner that will do the laundry.... it's sort of based on what's expected as 'industry standard'  You won't find many domestics climbing ladders for example. 

 

In your shoes I would be sure to keep the two very separate. Separate names, bank accounts etc. 

 

Mrs Smith hires you you clean windows and then hires your wife to do the house work.  You can't let her BACS you a combined payment for example as it's starting to look as if you're one company. Got to make sure the payments are separate. 

 

Regarding vehicles nothing wrong with letting the wife use it.  Just can't claim mileage.

 

As for the Scafolders Audi my old boss at a commercial I worked for had a GT3 Porsche. His argument is he isn't a window cleaner.... he's a director of a national Ltd company with over 500 employees. 

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Dave Shaw
Where you need be careful [mention=5847]DaveShaw[/mention] is in the accounts side of things.  
 
See, many domestic cleaners clean inside windows but not outside.  Many window cleaners clean outside but don't Hoover and do the dishes.  
 
If they argue you are the same business then you can reasonably argue against as you'd be hard pushed to find a window cleaner that will do the laundry.... it's sort of based on what's expected as 'industry standard'  You won't find many domestics climbing ladders for example. 
 
In your shoes I would be sure to keep the two very separate. Separate names, bank accounts etc. 
 
Mrs Smith hires you you clean windows and then hires your wife to do the house work.  You can't let her BACS you a combined payment for example as it's starting to look as if you're one company. Got to make sure the payments are separate. 
 
Regarding vehicles nothing wrong with letting the wife use it.  Just can't claim mileage.
 
As for the Scafolders Audi my old boss at a commercial I worked for had a GT3 Porsche. His argument is he isn't a window cleaner.... he's a director of a national Ltd company with over 500 employees. 

So all of the above is certainly do-able then as long it’s done correctly?


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Green Pro Clean Ltd
4 hours ago, Dave Shaw said:

So all of the above is certainly do-able then as long it’s done correctly?

 

Yes and No -- I accept no responsibility for any Rodgering you receive from HMRC due to my advice

 

HOWEVER, as long as you go with the total separation,  separate bank accounts, separate company names etc I don't see a reason it isn't doable. 

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Spartan
On 07/05/2018 at 09:10, Dave Shaw said:


And it will keep increasing although there has been talk of getting rid of it all together. Really can’t see this happening as it will put a lot of people out of business and rather than payin their taxes they will be claiming benefits off the government and they won’t want that. Just the same as they will never stop giving away free houses and money to people the can’t be ar5ed gettin a job.
 

 

Yeah I remember reading something along those lines about 2 months ago - the idea of dropping the VAT threshold to £26k

if that ever happened (and I hope to god it doesn’t) I’d have to rethink my business.....

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