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I would be grateful if an UK tax expert can help with the following query. A and B are partners in a VAT registered business. They commenced trading in another business, again as partners, in a business with standard rated supplies. Obviously this new business must charge VAT on its sales, irrespective of the level of turnover, by virtue of the fact that the partners are registered persons. A and B want to introduce C, currently an employee, as a partner in the new business. The purpose of this is to give C an incentive to develop the new business allowing A and B to devote more time to their original business. What are the VAT implications on the new business bearing in mind that the turnover of this business is way below the registration threshold. Does the introduction of a third party create a new entity for VAT purposes? Any constructive comments would be greatly appreciated.

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