Ownership of businesses run by a husband and wife

Mr C ran the Commonwealth Café trading as a sole trader below the VAT registration limit. His wife originally from the Philippines ran the Waterfront Restaurant in adjoining premises also as a sole trader with sales below the VAT registration threshold. HMRC ruled that the husband owned both businesses and their combined turnover exceeded the registration threshold between 2009 and 2016.

The taxpayer appealed.

The First-tier Tribunal noted that factors pointing to a single business included the fact that there was a single website; the leases liability insurance and alcohol licence being in the husband’s name; the taxpayer stating in an HMRC questionnaire that he owned the restaurant; all card payments for both businesses being banked into Mr C’s account; and sharing a washing-up area.

However the wife controlled the menu in the restaurant and each business had separate tills and staff. The opening hours were different...