Newsletter May 2019

Single or double trade?

With the mandation of MTD for registered businesses for VAT with a turnover exceeding the VAT threshold (£85,000) that came into force from 1 April 2019, care should be taken if you try to separate a business for VAT purposes.

A recent case heard by the First Tier Tribunal (FTT) makes it important to get matters correct and professional help. A taxpayer's main trade was as a plasterer but he also carried out liquid floor screeding. He was a sole trader until 2013 but then formed a partnership with his wife for the screeding. The aim was to separate the businesses so that only the partnership was VAT registered even though its turnover was under the threshold. This allowed it to claim the input tax on materials. However, the plastering business was not registered and this allowed the taxpayer to offer his customers lower rates than would be the case if he had to add VAT.

HMRC said there had only ever been a single sole trader business and the combined turnover of both activities required a retrospective registration date of 1.3.13. The taxpayer appealed.

The FTT was satisfied that there were two businesses. Further, the activities each had different customer bases in different locations. The taxpayer made some efforts to present them as separate businesses issuing invoices with separate headers However, this was not always carried out consistently. Sometimes invoices included both activities and only one employer's liability insurance policy was held. But overall, the FTT decided it was the taxpayer's intention for the businesses to be separate.

The taxpayer's appeal was allowed.
(Darren Vaughan v HMRC)

DATES TO REMEMBER:

1 May 2019 - Due date for Corporation tax for companies with an accounting period ended 31 July 2018.

7 May 2019 - Due date for filing and payment of VAT for the period ended 31 March 2019, unless you submit a paper return then the date is 30 April 2019.

31 May 2019 - Last date for giving employees a form P60 for 2018/2019 to each each relevant employee who was working for you on 5 April 2019.

Monthly Dates:

19th of the Month:

Due date for postal payments of PAYE, NIC and CIS deductions and on-line filing deadline for CIS300 monthly return to HMRC.

22nd of the Month:

Due date for electronic payments of PAYE, NIC and CIS deductions to HMRC.

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