VAT

A trader is generally required to register for Value Added Tax (VAT) for making supplies of goods and/or services, subject to his or her turnover exceeding certain thresholds. The most common are €37,500 for the supply of services, and €75,000 for the supply of goods. Some traders are generally not required to register for VAT, although they may choose to do so. These include traders whose turnover does not exceed the thresholds above, and also farmers. Traders engaged in exempt activities are not permitted to charge VAT. However, they may, in common with farmers, Government Departments and other bodies be required to register for VAT, in order to account for VAT on services or goods received from suppliers outside Ireland.

A VAT3 form must be filed with the Revenue Commissioners via ROS by the 23rd day following the end of the two month taxable period e.g. the VAT return for the period January/February must be filed by 23 March. The normal taxable period for VAT is two calendar months, though some small businesses may opt to make returns every four calendar months.

The VAT3 form is simply a summary of:

• VAT due by you for the period (Box T1)
• VAT reclaimable by you for the period (Box T2)
• VAT due to Revenue (Box T3)
• VAT repayable to you (Box T4)
• Goods supplied to and received from another EU member state (Box E1/E2)

In addition, an annual return of trading details (sales and purchases) must be completed on form RTD is required. A VAT registered organisation is entitled to reclaim VAT on purchases. However, VAT incurred on expenses for non-business purposes cannot be reclaimed.

There are also a list of expenses on which VAT cannot be reclaimed even where the expenses relates to the business.

• Expenditure on food or drink
• Personal or entertainment services
• Expenditure on petrol (other than as stock-in-trade)
• Purchase or hire of passenger motor vehicles
• Expenditure on accommodation other than qualifying accommodation in connection with attendance at a qualifying conference

DFX Accounting Services provides a comprehensive service relating to all VAT issues. Whether you need us to prepare and file VAT3 returns or need advice on specific VAT issues, we will be able to assist you.