Splitting a business to avoid paying VAT

It is not fraud - I know various accountancy firms who operate through different (Non Vat registered) entities.

There are several Tribunal cases on this point (including an unsuccessful one involving accountants).

If too much VAT is being lost, expect a swift Direction from HMRC - although it cannot be retroactive.

In article , Troy Steadman writes

Top-posting corrected...

Is it really any different to Tesco's setting up a Jersey operation to avoid having to charge VAT on CD's and DVD's sold via the Tesco website?

conjunction with a printer, to undertake printing and subsequent

Tax avoidance isn't a crime. If its allowed to be done under current regulations, then whats the problem?

Martin <

You're not very bright then, are you?

If you look at my post, you will see I had to correct the previous poster's top-posting in order to post a sensible reply.

I made no criticism of his top-posting, so take a chill pill.

You lost me mate. Go look here "

" Lua

conjunction with a printer, to undertake printing and subsequent

There is nothing wrong with the type of scheme suggested above. That is not an artificial scheme, it is quite reasonable to outsource things like printing and mailing, and anything else that is not part of your core business.

Particularly if the main business is outside the scope of VAT, but the outsourced business would be inside.

It still would not have been allowed if it were done to *avoid* having to register for VAT, but in that case, it is being done in order to be able to register (Most businesses supplying other businesses are better off registered - it is only "final" suppliers who can get a competitive edge by not charging VAT).

That is not at all the same as the type of thing suggested in the cash/CC difference case.

It would be perfectly reasonable to outsource your CC payments to another business. But that would be financial transactions that are outside the scope of VAT, so there would be no more VAT payable on the CC bought goods than on the cash bought goods.

If the total value of taxable supplies you supply (goods you sell or give away that are potentially liable for VAT) is above the threshold, then you

*must* register for VAT.

If you separate your business into smaller chunks in order to avoid registration, then the aggregate across the smaller businesses will count, and you will have to register.

The law on this:

And HMRC interpretation of it:

"Martin Davies" wrote

The problem is that, were this scheme to become widespread, the govt may quickly bring the VAT threshold down (much closer) to *zero* - otherwise, no-one would be paying VAT!

I know the distinction used to be made between avoidance (legal) and evasion (illegal), but there seems to have been a move recently to use the terms synonymously to describe illegal practices.

OK, prove me wrong then!

Matti

It has been widespread for a while now that I know of. Plenty of VAT is collected. Come to think of it, there are also VAT exemptions people can claim in certain circumstances. Hasn't caused a major problem yet.

Martin <

But the original post wasn't top posting! It was an original post with a quote after!

Or do you normally write letters like this one:

"Rover goes into receivership" I would like to know what you think about

D'oh

In article , sharky writes

Idiot! I couldn't care less. Now f*ck off!

In article , sharky writes

You were trying to and didn't succeed. I wound you up in return and you fell for it big time.

DoobieDo.

And I started it by winding all of you up and you all fell for it.

What's the most annoying thing in Usenet?

In article , Mr X writes

Not as far as I can see.

X-No-Archive: yes In message , sharky writes

It's not a question of like or dislike. Chronological posting in which salient comments are added underneath suitably trimmed follow-up material is a Usenet convention that has evolved over a quarter of a century. The many reasons, which I'm not going to list, are so self-evident that they underline common sense.

In article , Marshall Rice writes

Further developments on that front:

"Call to end CD sales loophole By Bill Wilson The Treasury is losing £80m a year in customs duty on Jersey-sold CDs

Small business are calling on the government to change the law to stop the sale of VAT-free CDs from Jersey by major supermarket chains Asda and Tesco.

Asda began its offshore operation two weeks ago, with its entire 140,000 CD, DVD and video lines for sale.

Tesco has been selling chart CDs from Jersey since last December, and both have reported strong interest in their products.

Jersey has no VAT on goods sold there, and, as long as items cost less than £18 and are posted individually, Revenue & Customs cannot impose tax when the goods are brought into mainland UK."

And:

"The government is committed to taking firm action to address any kind of arrangement which is set up artificially with the objective of avoiding paying a fair share of tax" UK Treasury spokesman

I prefer to use http:\\

HMRC would normally put both companies into the same VAT group to stop this. It only applies from the date of the direction, so you get away with anything that happens before they catch up with you.

Yes. Because it is in a different country.

and the country is ?