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A taxpayer had a business selling ice cream. His son joined him in 1997. They entered into a partnership and shared the profits equally between them.
They began a business selling hot food in 2005 again in partnership. In 2010 the ice cream business was transferred to a company in which both taxpayers and the son’s wife had shares.
Neither business was VAT-registered because their sales figures were less than the threshold.
HMRC decided the two entities were in effect a single partnership between the father and son and since the aggregate turnover exceeded the VAT threshold the taxpayers should register for VAT.
The taxpayers appealed claming the businesses were separate. The evidence was that the son’s wife injected £24 000 into the ice cream concern in 2005 and later began working in the business “to protect her investment”.
As a result she became...
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