Hi, im looking to go into solar pv but im self employed at the minute and would prefer not to be VAT registered, could i set up a seperate business to install solar pv and register that company for VAT?
so technically one company would install for the FIT and another would install under par p, both being me though.
cheers
In a nutshell, you can't trade as two "separate" individuals if remaining self employed. For tax an NI purposes, you will always be "Mr X, Trading as...." - that's as far as they go. Your customers would see it differently, initially, but the moment all of your "trading names" combined hit the various thresholds, you'll need to register for VAT, pay the higher tax, etc.,
However, you *can* set up a limited company, and remain also self employed. In this way, you have two legally different entities for trading.
In this scenario, you would be treated as an employee by your limited company, and subject to tax rules for Directors - which is to say any salary you drew would be subject to PAYE, and any dividends you received subject to personal taxation on an annual basis.
Legally, the company would be responsible for a proportion of your NI payments, in respect of your employment, and you would also be responsible for NI contributions in your self employed entity. You may end up paying more in this way. The company would, after a point, also become liable for corporation tax.
It is, to be fair, a precarious position to manage through, and it really needs expert tax accounting knowledge to ensure you only pay what you have to in this set up for maximum advantage.
Another way around such issues can be to set up a "group" of companies - although I think you need to own three minimum to do this. In this way you can have both VAT and non VAT registered businesses trading under one umbrella, so to speak.
There's no easy answer to this question, as so much depends on your current financial arrangements, as to which way forward is most efficient.
Essentially, however, what you are probably looking to do is to set up either one or two limited companies, become a director in both, and pay yourself on that basis. In this way, you'd reduce the likelihood to need to register either for VAT, and take your tax liability out of the "business" as such.
There's no reason you can't be a director in two companies, and there's no reason that you couldn't have Liam B Domestic Electrical Ltd as one business, and Liam B Solar Electrical Ltd as another, for example.
However, you would then in turn need to be very careful about almost everything you do - in terms of trade accounts, assets, liabilities, and so on - who pays for your vehicle (easy answer, you do and charge both companies for mileage)....and so on, right down to office rent, electricity, phone and so on.
Again, it needs proper and careful accounting advice on hand to set up properly.
