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G Christodoulou (TC2819)
The taxpayer opened a hairdressing salon in 1998 and a restaurant five years later. His wife was co-owner of the eatery as a condition of the liquor licence but the freehold of the premises was in his name only.
His wife worked in the restaurant but received no payment. The venue closed in 2011 because it was not financially viable.
HMRC said the taxpayer was a sole trader in both the hair salon and restaurant businesses. The former’s turnover exceeded the VAT registration threshold from September 2001 and the taxpayer registered for VAT.
The Revenue said sales from the restaurant should be subject to VAT even though turnover never reached the threshold because it was one of the taxpayer’s businesses.
He appealed saying he and his wife ran the eatery in partnership and it was therefore a separate legal entity; there was no VAT...
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