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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. Ìý

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

2. Ìý

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

3. Ìý

   •ÌýÌýÌýÌý 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 connection with