Navigating VAT Registration: Implications of Business Splitting for HMRC Compliance

• VAT registration threshold increased to £90,000 on 1 April 2024
• Businesses must register for VAT if taxable sales exceed £90,000 over a rolling twelve-month period
• Business splitting is a strategy to avoid VAT registration
• HMRC can issue a direction to treat closely connected entities as a single taxable entity
• Legislation in Value Added Tax Act 1994 prevents artificial separation of business activities
• Case study example of splitting garden maintenance and fencing installation businesses
• Factors for a legitimate split include separate bank accounts, marketing efforts, accounting records, ownership structures, activities, transactions, and financial independence
• Lack of clear separation may result in retrospective registration by HMRC

Source: warrington-worldwide.co.uk

Note that this post was (partially) written with the help of AI. It is always useful to review the original source material, and where needed to obtain (local) advice from a specialist.

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