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

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.