Business Advice

[Inthecup]

Is there any accountants / business gurus on here?

I own a small building company which is VAT registered, mainly focusing on new builds & extensions.

I'm wanting to set up a company that focuses more on maintenance as I've won a few small maintenance contracts and will also do small domestic jobs.

The question is if my wife runs this company will we have to go voluntary VAT registered as my main company so it won't be seen as VAT avoidance? The company will be run from a different address.

Cheers

 

[alicat]

Dunno.

But I do know tax avoidance is legal and tax evasion isn't. Which flavour are you aiming for?

 

[Saluki]

Ring the HMRC and they will give you chapter and verse, they also run free courses to help with this sort of thing.

 

[400bhp]

If the business is providing a different service then no, but check with HMRC and/or get some advice.

 

[ASC1951]

It won't be enough to have one business in your name and one in your wife's, or to run them from different addresses. They will have to be genuinely separate and not controlled by the same person. If that is the case, you should be fine. The principles are set out in the Revenue's guidance FRS6200 and FRS6300 - linky here http://www.hmrc.gov.uk/manuals/frsmanual/frs6300.htm

If both businesses are in the same general line of work, I would think that your wife would have to show that she spends a significant chunk of her time actually running the second operation and you that you do very little for it if anything. Even then you are going to find HMRC sceptical, given the relationship, so don't assume that this is something you can 'fudge your way round.'

IME you need to be asking your own accountant, not relying on the assembled wisdom here. And there are issues of NI and group corporation tax thresholds, too, so if you are talking about running two limited companies (at least one of them VAT registered) without engaging a professional accountant - don't!! Not just someone to do your books, but someone who can give you proper tax advice. [I'm not an accountant; but I do run multiple small businesses.]

 

[Inthecup]

I will / have phone HMRC. Tried 3 times last week. Was on hold for over 10 minutes twice and the third got cut off.

Just thought I would see if I could pick some brains on here.

 

[screenman]

I will / have phone HMRC. Tried 3 times last week. Was on hold for over 10 minutes twice and the third got cut off.

Just thought I would see if I could pick some brains on here.

Are you ringing the right number? I always find them very quick and helpful.

As for the original question, dodgy ground that one, I was advised not to by my very expensive accountants. You know as well as I did when I though about it that the VAT registered bit would be claiming the VAT back on purchases.

 

[ASC1951]

I will / have phone HMRC. Tried 3 times last week. Was on hold for over 10 minutes twice and the third got cut off.

You're not alone in that, TBH. And as for getting a response to a letter ....

Just thought I would see if I could pick some brains on here.

Fair enough. My experience has always been that my accountant saves me both time and money, not least because when HMRC see his stamp on the tax returns they don't expect me to waste my time proving that I am not in fact cheating them (and I'm not!) And when you have husband and wife both working in the operation, there genuinely are ways of arranging that relationship which have different tax consequences: for instance, one employing the other; or splits of earnings between wages and dividends.
Ringing HMRC is fine if you just need an answer to "I'l proposing to do X. Is that ok?" Once you get through to the right person, they are as Screenman says, generally knowledgeable and helpful. But what they can't usually do is answer "I am thinking of doing X, Y or Z, with combinations A, B and C. Which would be best from the point of view of PAYE/Corporation tax/personal tax/Vat?" - which I suspect is the question you need to ask.

 

[Inthecup]

Who is really going to run the second business, you or your wife?

My wife will run it. It will be a good wee project for her and will fit in with looking after the kids. I've got enough on my hands but would have to do the pricing.

Just looking at another way of bringing a little more money in but looks like I'd be better off either knocking it on the head or employing someone else (which I don't really want to do) and just running one business.

 

[ASC1951]

My wife will run it. It will be a good wee project for her and will fit in with looking after the kids. I've got enough on my hands but would have to do the pricing.

That could be ok, if all you are doing is working out quotes. But who actually does the work if a quote is successful? If that is you, and you get paid for it, I can't see how that is a separate business.
For it to work I would say that she has to do all the admin apart from your pricing, she has to get someone other than you do do the work, she has to pay that other person, and any profit has to go into a bank account which you are not party to and from which she does not in practice withdraw money to pay to you.
If you already have 'enough on your hands', you would need an extra employee or subbie anyway, wouldn't you?

 

[Inthecup]

That could be ok, if all you are doing is working out quotes. But who actually does the work if a quote is successful? If that is you, and you get paid for it, I can't see how that is a separate business.
For it to work I would say that she has to do all the admin apart from your pricing, she has to get someone other than you do do the work, she has to pay that other person, and any profit has to go into a bank account which you are not party to and from which she does not in practice withdraw money to pay to you.
If you already have 'enough on your hands', you would need an extra employee or subbie anyway, wouldn't you?

I have a self employed joiner that would be used for doing the work, so would only be used when required. I can't be doing with the constant phone calls & questions so that's why I thought a wee project for my wife.

 

[Saluki]

I will / have phone HMRC. Tried 3 times last week. Was on hold for over 10 minutes twice and the third got cut off.

Just thought I would see if I could pick some brains on here.

Try them after the 31st, its mad last minute self assessment time and the phone lines are a bit busy. Last week I rang them and was through in 5 minutes, I rang in the morning.

 

[Inthecup]

Try them after the 31st, its mad last minute self assessment time and the phone lines are a bit busy. Last week I rang them and was through in 5 minutes, I rang in the morning.

Must be because they owe me over £200 after doing my return that their not answering my calls!!!

 

[ASC1951]

I have a self employed joiner that would be used for doing the work, so would only be used when required. I can't be doing with the constant phone calls & questions so that's why I thought a wee project for my wife.

Well, it seems perfectly do-able to me in that case. Separate address, email, phone line, bank account etc - and in due course she will have her head round the pricing as well.

"You don't mind sorting out the kids for a few days, do you, dear? I'm off to the Bahamas - it's been a good first year!"

 

[Inthecup]

[QUOTE 2891870, member: 9609"]I am guessing you are wanting to set one up as vat reg and one that isn't so as to be more competitive with non business customers - if so it sounds a little obvious and could make the vat man very interested in you. In which case I would definitely get your accountant to set it up, then if at some time in the future it all goes pear shaped you have someone to blame. For instance if you traded for a year turning over 50k the vat man may say you should have charged vat so you owe us 10K he may the apply a further penalty of 10K. - and that would be one hell of a whack.

When you say yuo have a company, do you mean a ltd company ? if not look into setting one up, you can avoid NI contributions which is a hell of a saving. But do it through your accountant.[/quote]
Why is business such a minefield?