VAT One Business or Two?

A recent VAT Tribunal had to decide whether two hairdressing businesses should be treated as a single business for the purposes of VAT registration.

The distinction was critical as the two separate businesses were operating below the registration limit (currently £85,000) and the combined operation would have exceeded the limit meaning that VAT would need to be charged.

In a number of cases HMRC have been successful in aggregating the turnover of two businesses carried on by the same person(s).

However in this recent case it was established that the couple had never intended to run a single business in partnership. There was also physical separation of the premises, separate of clientele, different stylists worked for each salon and separate books were kept.

Note that where the same person carries on several businesses, the combined turnovers of all of those businesses need to be considered in deciding whether or not the VAT registration threshold is exceeded.

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