Way to avoid charging VAT

No, don't do it, you are asking for trouble.

I didn't think you charged a Charity Vat once they have an exemption, you just don't charge it to them. 0% the Vat rate on the Invoice if they have the cert, if they don't charge them Vat as there chancers.

This is copied from Revenue's own notes on S.8.8 VAT Act 1972.

Section 8(8) allows the Revenue Commissioners to group register
• Two or more persons established in the State;
• Who are engaged in the supply of goods or services in the course or furtherance of business; and
• Who are closely bound by financial, economic and organisational links; and
• To do this where it seems necessary or appropriate for the efficient and effective administration, including collection, of VAT.
This allows the Revenue to compulsorily group register inter-linked persons who are manipulating the system.

Splitting a consulting business into two bits is very likely to be seen as manipulating the system.

Do bear in mind that "person" covers both an individual and a company.

www.revenue.ie/en/about/foi/s16/vat/chpt-09/9-16.pdf

Mr. Incognito wrote: »

Happens all the time in political circles, business circles, legal circles and even in the provision of tax advice.

Oh well, if it Happens all the time it must be OK:D

It's not, for the reasons stated above by nompere and exaisle. Don't do it!

Mr. Incognito wrote: »

oh dear.

The above relates to partnerships or corporate VAT groups

it has nothing whatsoever to do with the point in hand.

I’ve never seen myself as infallible, particularly when writing late at night, so I decided to go back to the actual legislation on this. It isn’t easy to read, but Revenue’s comment on it is straightforward and unequivocal.

S. 8(3)(e)(i) VAT Act 1972:

“ …where in the case two or more persons one of whom exercises control over one or more of the other persons, supplies of … services of the same nature are made by two or more of those persons, the total of the consideration relating to the said supplies shall, for the purposes of the application of paragraphs (c) and (e) in relation to each of the persons aforesaid who made the said supplies be treated as if all of the supplies in question had been made by each of the last-mentioned persons;”

Revenue’s comment in relation to the meaning of this is simple:

“Proviso to subsection (3)
“(i) prevents connected persons from splitting their business activities into business units which can trade below the registration thresholds thus avoiding VAT,”

Jim Somers, once Revenue and latterly Ernst & Young, one of the foremost authorities on Irish VAT, and author of the only closely argued book on VAT, uses the word “must” in discussing how Revenue operate this provision, and illustrates it with an example of a hairdresser trying to split her sole trade with her two hairstylists, so that there is a sole trade and two limited companies. The author is in no doubt that this will not work. The Irish Taxation Institute’s book on VAT at page 25 of the 2008 edition (it’s the copy I have to hand, but the legislation is unchanged since FA 1993) refers to S.8(3)(e)(i) as being an “anti-fragmentation” provision.

The critical thing in this is the nature of the services. So a tax consultant, registered for VAT, who sets up a company to run dinner parties, will not have to charge VAT on his catering activities unless the turnover exceeds €37,500. But a tax consultant who attempts to divide his business so that he doesn’t have to charge VAT to non-registered or exempt clients is going to get caught.

Given that the present registration for services is €37,500 it is only small businesses and perhaps start-up businesses that are likely to fall within these provisions. The registration level for goods is €75,000 which is still a fairly small operation.

I'm with Nompere on this one.
Anti Fragmentation would catch you on the VAT. Nice to see a good discussion on a VAT topic reaching the right answer after visiting a couple of red herrings.
Nice one guys.