Readers' forum : Sources of income

I have a client who is a limited company with three sources of income: bed and breakfast for short-term guests; marquee hire for weddings; and livery services. The client’s total income is now approaching the VAT registration threshold. We would like to avoid registering if possible because all of her customers are B2C and she has little input tax to claim. There seem to be two ways to avert the problem.

First we understand that the livery income of about £20 000 a year is exempt from VAT so can be ignored – but is this actually the case? A friend of my client referred to the ‘Windows’ case as being the relevant case law to quote to HMRC.

Second is there scope to transfer the bed-and-breakfast activity into a partnership with her husband or a separate limited company on the basis that the two entities would each...