Does a client with two business need to register for VAT
Q: My client is a sole trader. He has two different trades (business consultancy and a café), both generating standard-rated taxable income. Individually the two activities have incomes of £65,000 and £45,000, does my client have to VAT register? Can he just VAT register for the business consultancy trade?
A: Based on these figures, your client is compulsorily required to VAT register as his total UK taxable income is over the registration threshold. When deciding whether a VAT registration is required, you must consider the income of the 'entity' overall and not the individual trades / income streams. The entity in this case is the sole trader himself, but an entity could also be a company, partnership etc. If one trade was within a company and the other was as sole trader, VAT registration would not be required as each entity's turnover would be below the VAT threshold (unless the split of trades between entities was found to be artificial by HMRC).