Starting business to offset tax/VAT

Bartoni79

Hi All,
Is the following scenario legal?
- setting up a business registered to my house but not actually turning over money
- but using it to buy building materials (20kish) (avoiding VAT) for an extension
- then filing accounts to companies house showing zero income but costs only - therefore the business will be loss making 
- I’m assuming filing company accounts will be 1-2k vs the vat saving from building materials for an extension (20k)?

Thanks

[Deleted User]

In short - you are setting up a company with the full knowledge that it is never going to trade and, indeed, will be loss making throughout its existence?

Bartoni79

Correct. A lot of companies seem to be “loss making” on companies house. Is that illegal?

InMyDreams

You don't actually need to register a limited company to register for VAT. Any self-employed person can register their (legitimate) business.

That said, even if you were running a legitimate VAT registered business (self employed or limited company) you would still not be able to (legally) reclaim the VAT for building materials that were nothing to do with the business and its VATable supplies.

So your idea is a non-starter, I'm afraid.

Jeremy535897

If the company spends money on your house, all of that spend is taxable on you as income, even though you have presumably funded the company out of your taxed income. The VAT recovery would probably be denied, and the company would have a useless loss.

About the worst idea I have heard in a long time.

Bartoni79

Ok - thanks for your comments,

Grumpy_chap

Bartoni79 said:

Hi All,
Is the following scenario legal?
- setting up a business registered to my house but not actually turning over money
- but using it to buy building materials (20kish) (avoiding VAT) for an extension
- then filing accounts to companies house showing zero income but costs only - therefore the business will be loss making 
- I’m assuming filing company accounts will be 1-2k vs the vat saving from building materials for an extension (20k)?

Thanks

It looks like a thought out planned white collar fraud.

Bartoni79

If I was planning a fraud, I wouldn’t post it on moneysavingexpert! I was trying to understand if it was legal as I’m not an accountant.