The Book-keepers Forum (BKF)
The Book-keepers Forum (UK) -> VAT, Payroll & Tax -> Client with 2 companies - garage/MOT
Post Info TOPIC: Client with 2 companies - garage/MOT
Rachel19


Veteran Member

Status: Offline
Posts: 61
Date:
Client with 2 companies - garage/MOT
Permalink  

Hi everyone,

I've just completed the first set of accounts for a new client who has 2 Ltd companies. He is the sole shareholder and director of both and was advised to set them up separately, but I think I'm missing something as I'm not sure why! Both companies operate out of the same double unit and are profitable.

Company 1 is the garage that does servicing and repairs. This company is Vat registered as they are over the threshold.

Company 2 is the MOT station that just does MOTs. This company is not Vat registered as MOTs are outside of the scope for Vat. They are a proper registered MOT station.

As far as I can see, combining the 2 companies would save on costs, especially admin costs (eg 1 paye scheme and set of accounts rather than 2), and all the Vat could be claimed in respect of the expenses that Company 2 are currently paying.

Am I missing something? Is it beneficial to run the separate 2 companies?

 

 



__________________

All thoughts are my own and should not be used as professional advice.
Leger


Master Book-keeper

Status: Offline
Posts: 3904
Date:
Permalink  

On the face of it it does seem a bit daft, and like you I can't see any reason to have two separate companies.

How does it work on the rent and business rates of the unit, are they in one name or two?



__________________

John 

 

 

 Any advice given is for general guidance and professional advice should be sought applicable to your circumstances.
Rachel19


Veteran Member

Status: Offline
Posts: 61
Date:
Permalink  

Thanks John, they are technically 2 units with 2 doors, just missing a wall in the middle! It did work in his benefit recently as he got 2 of the rate grants, one for each company.

__________________

All thoughts are my own and should not be used as professional advice.
Cheshire


Master Book-keeper

Status: Offline
Posts: 8646
Date:
Permalink  

Hi Rachel
What has your client said about the reason for 2 companies?

Just to clarify - is this the company's 1st ever set of accounts? Or the first set you are completing for them?

What came first - the MOT station or the garage, I suspect the latter. Im wondering if there were any issues with the original company that would have prevented it from applying for the MOT station, given the DVSA have such hugely stringent rules, including financials and credit history (even unspent and frankly sometimes seemingly spent litigation against a limited!)

As an aside, they could still have received 2 rates grants, one for each heredictment, regardless of being two separate limiteds.

I presume the shareholding is exactly the same?

All I would urge is great caution when you are conidering merging/closing one down that it is done carefully with regards to the DVSA.  Do not jump through their hoops sufficiently and they will lose their ability to perform MOTs. (The admin can be a bit of a mare)



__________________

 Joanne 

Winner of Bookkeeper of the Year 2015, 2016 & 2017 

Thoughts are my own/not to be regarded as official advice,which should be sought from a suitably qualified Accountant.

You should check out answers with reference to the legal position
Rachel19


Veteran Member

Status: Offline
Posts: 61
Date:
Permalink  

Hi Joanne,

They were trading for 2 years before I took over, this will be my first set of accounts for them. He says that he was advised by his accountant at the time to set it up that way, but the accountant in question has turned out to be a bit dodgy so neither of us trusts that advice!

Both companies were set up at exactly the same time, they were 2 directors/shareholders when they were incorporated, but the current director bought out the other guy last year.

I can only think that it must be a DVSA reason to keep them separate. Accounting wise I can't see any reason to keep them this way.

I'll have a sit down chat with him when I can and see what's best.

Thanks :)

__________________

All thoughts are my own and should not be used as professional advice.
Cheshire


Master Book-keeper

Status: Offline
Posts: 8646
Date:
Permalink  

Rachel19 wrote:

Hi Joanne,

They were trading for 2 years before I took over, this will be my first set of accounts for them. He says that he was advised by his accountant at the time to set it up that way, but the accountant in question has turned out to be a bit dodgy so neither of us trusts that advice!

Both companies were set up at exactly the same time, they were 2 directors/shareholders when they were incorporated, but the current director bought out the other guy last year.

I can only think that it must be a DVSA reason to keep them separate. Accounting wise I can't see any reason to keep them this way.

I'll have a sit down chat with him when I can and see what's best.

Thanks :)

DVSA dont generally specify.  You can be a sole trader/partnership or limited to set up as an MOT station.

Care if they have separate trading names if/when getting round to sorting with DVSA.

Accounting wise from what you say - no apparent reason.    Let us know what you find out.



__________________

 Joanne 

Winner of Bookkeeper of the Year 2015, 2016 & 2017 

Thoughts are my own/not to be regarded as official advice,which should be sought from a suitably qualified Accountant.

You should check out answers with reference to the legal position
Rachel19


Veteran Member

Status: Offline
Posts: 61
Date:
Permalink  

I think this might be one of those conversations that is best done face to face, so I might have to wait until it's a bit safer to do so.

I'll keep you posted.

__________________

All thoughts are my own and should not be used as professional advice.
Page 1 of 1  sorted by
 
Quick Reply

Please log in to post quick replies.
The Book-keepers Forum (UK) -> VAT, Payroll & Tax -> Client with 2 companies - garage/MOT
Tweet this page Post to Digg Post to Del.icio.us
Members Login
Username 
 
Password 
    Remember Me  
©2007-2024 The Book-keepers Forum (BKF). All Rights Reserved. The Book-keepers Forum (BKF) is a trading division of Bookcert Ltd. Registered in England Company Number 05782923. 2 Laurel House, 1 Station Rd, Worle, Weston-super-Mare, North Somerset, BS22 6AR, United Kingdom. The Book-keepers Forum and BKF are trademarks of Bookcert Ltd. This forum is a discussion forum only. There will usually be more than one opinion to any question and any posting should not be viewed as a definitive solution. No responsibility for loss occasioned to any person acting or refraining from action as a result of any posting on this site is accepted by the contributors or The Book-keepers Forum. In all cases, appropriate professional advice should be sought before making a decision. We reserve the right to remove any postings which are offensive, libellous, self-promoting or engaged in covert marketing. We will not notify users of removals. The views expressed in the forum posts are those of the individual and do not necessary reflect or agree with those of The Book-keepers Forum. Any offensive or unsuitable posts will be removed by the moderators. Any reader of this forum can request for a post to be looked into by sending an email to: bookcertltd@gmail.com.

Privacy & Cookie Policy  About