Accountancy advice please

[yoonited]

It might be quiet on here but I bet someone will still see this and know the answer to this query.

I intend to start a new business in Carlisle over the coming months, the turnover of which will dictate that I register for VAT from the outset. I'll be sole trader "yoonited trading as etc", I wasn't intending to set up a Ltd company.

What may complicate things is that I have a four bedroom flat in South London which I intend to be ripping apart and doing up very shortly, new kitchen, two new bathrooms complete redecoration etc, and then I intend to let three individual double bedrooms and keep a single bedroom (bolthole) for myself as I'll still need to visit London at least once a month, so it's handy for me to stay there occasionally and keep an eye on things, also a useful base for whenever I need to find a new tenant there.

My question is, as a VAT registered individual I'm already guessing that the rules on VAT would prevent me from claiming any VAT back on the (pound)20-25

[moorlad]

You're fine mate. Keep the Rental Income out of the new business as well. You'd have to opt to tax if you were going to charge VAT on the rents. It appears you never have from what you say (obviously there'd have been no point), and you aren't worried about reclaiming the VAT on the refurbs. As an individual you can have as many different business enterprises as you want, and as many different VAT registrations as well. You can also split the parts of a business (as long as the VAT Office will go along with it) to keep the various "new business ventures" individually below the VAT threshold. A bit sneaky but I've seen it work (I've also seen it backfire, so care is needed).

Rental is fine though, no VAT.

[yoonited]

Cheers for that Moorlad, I asked because someone working for me got caught a few years back. He was supplying sub-contract services to me and invoicing with VAT as he was registered. However, he also had a travelling disco business and had been doing weddings and parties for years, HMC&E hauled him in and told him that as he was a VAT registered individual he was liable to charge VAT for ANY services he provided, he never had on his disco business and he got clobbered.

[moorlad]

He could have got away with that with the right advice.

Your situation, though is different. It can be a complicated area, especially if you opt to tax, but if you haven't (meaning you've never reclaimed VAT on the property, you'll not have to charge any VAT on your rental income, generally). Best of luck with it.

[yoonited]

Cheers, it'll likely be fraught with problems and it's a 650 mile round trip to come down and sort it out every time, but I'd rather do it that way as some of my neighbours have sublet and had their places trashed in no time. I think having the key in my pocket and liable to walk in without notice anytime might be more likely to keep my tenants on their toes. I'd rather have sold the place but it's now too short in the lease to get a mortgage on it and I'll have an expensive and lengthy legal process to go thought to get it extended, the managing agents and landlord who owns the freehold are less than useless, so thought I might as well try and earn some money from it in the meantime.

[bluegadge]

Couple of points

Don't forget to try and squeeze as much of the refurb / repairs etc as revenue to reduce your tax liability at year end

Also if you have a mortgage you may need to inform them of your plans plus obviously take out Landlords insurenace blah blah blah

[bluegadge]

Yoon you also say you were not thinking of setting up a ltd company???

Have you fully thought through the benefits of doing so ??? You need to weigh them up pal.

All day long for me imagine paying virtually no National Insureance for instance...