Can my husband empty me as a sole trader?

[JanetheObscure]

I will, of course, seek the advice of an accountant, but I wonder if anyone can shed any lights on the following.

My DH is retiring from his permanent job and is going to set himself up as a sole trader for a limited amount of consultancy work. He doesn't plan to do this for very long, so he is not bothering to set up a business.

I will be doing the donkey work admin, plus some report writing for him. As I am also a sole trader (and have been for years), with other clients, can he pay me as a sole trader? I would invoice him and obviously declare the income on my self assessment tax return.

I know that sole traders can contract work to other sole traders, but does the fact that we're married make any difference? The alternative is for him to employ me, but as I'm happily self-employed I really don't want that!

I read something about VAT treatment of separate businesses (in your case sole trader businesses) being run from the same household.

The gist was that HMRC would look closely at arrangements where two businesses were being run from the same household/premises, to assess whether they should actually be considered as one for VAT purposes.

One impact would be that HMRC might consider the two enterprises to be one, and thus require VAT registration based on the combined turnover.

Thanks for this and apologies for asking in the title whether my husband can empty me!!

I will attempt to speak to HMRC about this.

No reason why he should need to employ you, in fact that sounds like more trouble than it is worth. No reason why you could not invoice your husband as you do with other clients, although if you generally share finances, I would make sure it isn’t going to push you into the higher tax band or mean a personal allowance is not fully utilised or whatever.

The point above on VAT is true, although if you have very different businesses, different bank accounts etc., then it doesn’t mean you will be considered on a combined basis.

Do not speak to HMRC on this. They are not your friend. Speak to an accountant. I am not by the way suggesting you are trying to do anything wrong, I am an accountant myself and I abide by the law, but I still wouldn’t contact HMRC for advice and wouldn’t contact them at all unless I must.

There is nothing unusual about what you are proposing.
How many MPs employ their wives as “assistants”? Many.