Expanding/second business

Cafe2019

My husband has run a cafe for 10 ish years and an opportunity has come up to change locations. Ideally we would like to sell the first business but there will be an unknown overlap period as we have 3 years left on lease. Is there a way to avoid (legally) vat registration as our income will soon exceed threshold (hopefully) and we will lose our small business rate relief. Could the business be registered in my name? would that even help as I am employed elsewhere part time and just do the paperwork side of things. Tia

00ec25

you mean if the 2 cafes are run simultaneously during a 3 year overlap period when the combined turnover would be > £85,000?

splitting the business into a "his" and a "hers" might look good on paper, but would not survive a nanosecond of scrutiny if HMRC have occasion to look since it would be obvious the two businesses are being controlled by the same management .... a married couple.

no reason of course why a business owner cannot also have a part time job, but as you suspect, it simply would not stack up if you then claim the "hers" business is run totally independently from the "his" business in your spare time.

the technical term used is "disaggregation" for VAT
https://www.gov.uk/hmrc-internal-manuals/vat-single-entity-and-disaggregation-manual

Cafe2019

Currently I’m not on the business accounts as I’ve always had my own job. Is there any benefit to us both being on the books, as you say owning as a couple? Tia

00ec25

Cafe2019 wrote: »

Currently I’m not on the business accounts as I’ve always had my own job. Is there any benefit to us both being on the books, as you say owning as a couple? Tia

on the assumption the business operates as a sole trader, rather than as a limited company (or a formal partnership between you and him?), then there would be no benefit in you being "on" the books.
Your problem with VAT is your turnover, not how much the business spends or how much its owner takes out for himself. Increasing costs, or making you a formal partnership, will not alter the fact "you" (ie he) are going to cross the Vat threshold.

Mistral001

Is the plan to run two cafes for three years and then move back to just running one? It seems like a lot of hassle just to move locations if you are - VAT or no VAT.

martindow

The way most high streets are at the moment I imagine that there are likely to be premises available in the area you would like to move to in a couple of years time and much nearer to the end of your current lease. In some towns it could well be the same shop you are looking at today.

phill99

Why can't ypu sell the first business now? The new business owner will take an assignment of the lease and there will be no liability with it.


If you want to run them together, then the first one is run on a self employed basis and the second is run as a limited company.
Alternatively, you have one in your name (although this will affect your personal tax liabilities) and one in your husbands name (both on a self employed basis).