Staying under the VAT threshold

invuk

If I were to run a business from a shop and also operate another online business from the same property would the turnover from both of these be added together or are they separate? Both businesses would be completely different and I am currently a self-employed sole trader. The point I am trying to make is can I have two separate businesses from the same address and have £85k turnover limits on both?

Pennywise

Assuming you're a sole trader, everything you do is "you", there is no concept of different businesses when it comes to VAT.
You'd need a different ownership structure, i.e. you as a sole trader doing the physical shop but you as a limited company doing the online business.  Even then you may fall foul of the VAT disaggregation rules.
https://www.gov.uk/hmrc-internal-manuals/vat-single-entity-and-disaggregation-manual

martindow

This is a situation where you need to have a discussion with an accountant as as Penny suggests there is scope for making bad decisions here.

I had a similar situation some years ago where I had a business with two (I thought) distinct parts.  The accountant strongly advised not to try to split the business and I accepted the need for registering for VAT.

It had the effect of making me much more rigorous keeping the accounts up to date which was good to see how the business was going as well as calculating the quarterly payments.   I had thought that VAT registration would be an entirely negative thing but there are compensations.

invuk

Thanks pennywise and martindow.

I have an accountant for the online business and am always under £85k. This is doing very little at the moment due to coronavirus. I am considering opening a shop so guess I wouldn't need to change anything until I get close to £85k for the two businesses combined?

One of my concerns is the online business means buying something which has little/no VAT - so can't claim anything back? Another complication I have is if I used the flat rate scheme would I need to apply the different rates to both businesses even under though they are both owned by me?

Lomast

There are no both business currently there are just two income sources to invuk as a sole trader. 

invuk

Sorry you are correct. I know I can trade with multiple income sources until I get to £85k so will bear this in mind. Thanks.