Commentary

V2.190C Treatment as a single taxable person—anti-avoidance and control

Part V2 Registration – deregistration

V2.190C Treatment as a single taxable person—anti-avoidance and control

V2.190C Treatment as a single taxable person—anti-avoidance and control

Overview of HMRC powers to direct treatment as a single taxable person

HMRC is empowered to make a direction under VATA 1994, Sch 1, para 2 to prevent any artificial separation of business activities resulting in the avoidance of VAT1 where it is satisfied that all of the following apply:

  1.  

    •     two or more persons make, or have made, taxable supplies

  2.  

    •     those taxable supplies are made in the course of activities carried on concurrently, previously or both

  3.  

    •     a person carrying on the single business would be liable to registration at the time of the direction if all taxable supplies of that business described in that direction were taken into account

HMRC is not required to establish that one of the main reasons for carrying on the activities separately was to avoid a liability to registration2. This was apparent in Venuebest Ltd3, where the tribunal found it unnecessary to make any finding in respect of the intentions of the appellant, but found it 'difficult to conceive of any motive for the arrangement other than the avoidance of tax'. For single or separate business, see V2.223.

In determining whether any separation is artificial, regard is to be had to the extent to which different persons carrying on those activities are closely bound together by financial, economic and organisational links4. For discussion of financial, economic and organisational links, see, for example, Osman5 and The Grand Folkestone Ltd6. There is nothing in VATA 1994, Sch

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