In a recent VAT Tribunal appeal, the Appellant was a partnership consisting of Mr and Mrs Belcher. Mr Belcher operated as a male barbers shop and Mrs Belcher operated a female hairdresser.  HMRC took the view that this was effectively a single business and thus attempted to register the partnership as a single entity. The Appellant had only one bank account, one set of accounts, one utility bill and insurance policy covering both shops, one account with suppliers and the Appellant submitted one income tax return as a partnership!


However, the VAT Tribunal Judge ignored the points listed above and decided in favour of the Appellants as they each took on and dismissed their own staff, had separate tills and a different client base and the expenses of each shop were paid for by the two individual business. The Judge was satisfied that the Appellant had their own economic risk and therefore could be regarded as running two separate businesses, which had an individual turnover below the VAT registration threshold. Although this is a favourable outcome for the Appellant, HMRC may appeal this decision to the Upper Tribunal.

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