There is scope for avoiding VAT by ‘splitting’ up a single business so that all or part of it does not need to register for VAT. This is most effective where the customers are unregistered, e.g. members of the public.

The HMRC Statement of Practice about artificial separation of business activities is on their website (www.gov.uk/government/publications/statement-of-practice-4-1983).

Example: Company and sole trader run in parallel

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