VAT is a complex area of law, and it revolves around a “person” as a legal entity and not a “business”. Generally, a “person” can be:
• an individual
• a limited company
• a partnership
If you are not VAT registered, then you cannot charge customers VAT. This earlier report discusses the question of registration.
Once registered, the VAT registration number is allocated to only one “person” and can be used by only that “person”. If you are both a self employed individual, and you are also running a limited company, the VAT number is not interchangeable. The question of registration has to be asked by each “person” and you may need (or want) to have separate VAT registrations for each separate entity.
Once a “person” is VAT registered, then ordinarily, all goods and services supplied by that “person” should carry VAT. There are very few exceptions to the VAT rule, and they are mainly relevant to any customers you have who reside outside the European Union.
So for example, if you are VAT registered and you’re a self employed individual who (a) does website design as your main trade and (b) offers guitar lessons as a sideline, then you are one and the same “person” in a legal sense. All of your business activities are “VATable” sales and all of your EU resident customers are liable to pay VAT – whether that’s for a web site or for a guitar lesson.
Conversely (for example), if you have a VAT registered company which offers management consultancy, and you also do a bit of “marketing” work as a sideline, in partnership with a friend, then the company and the partnership function as two totally separate entities. They cannot share a VAT number and any business done between the two entities should be done on a commercial basis and at “arm’s length”. The management consultancy fees from the company will charge VAT to the partnership, whereas the marketing fees from the partnership cannot.
If in doubt about who charges VAT to whom in any specific business relationship, simply establish which entity is the supplier and which entity is the customer. Which letterhead are you using to do the billing? If the position is still unclear, then it would be best to check with your accountant.