Vat

Tazz T

I have a question about VAT which I hope someone can answer.

The situation is that you don't have to register for VAT unless you invoice for services in excess of 25500 or thereabouts, so what happens after that? Does that mean you don't pay VAT until you reach that amount and you only pay on the excess or once you reach that amount you are charged on the entire amount?

I went over the limit last year working for a company but I never charged them VAT, so where do I stand. I hope someone can help me with this because I can't find the answer anywhere, even at the revenue commissioners website.

vector

Tazz T wrote:

I have a question about VAT which I hope someone can answer.

The situation is that you don't have to register for VAT unless you invoice for services in excess of 25500 or thereabouts, so what happens after that? Does that mean you don't pay VAT until you reach that amount and you only pay on the excess or once you reach that amount you are charged on the entire amount?

I went over the limit last year working for a company but I never charged them VAT, so where do I stand. I hope someone can help me with this because I can't find the answer anywhere, even at the revenue commissioners website.

The web cannot answer all questions. Maybe it is time to cunsult an advisor?
Also what are "you" - a sole trader?

Angel28

Under the Starting a Business section on www.revenue.ie there is a link to The Value Added Tax Guide This might be of some help. If not give them a call.

Victor

You are essentially in or out of the system, no halfway house.

Your problem is "when did I join the system"?. I suspect it is when you reached that threshold, you should have started charging VAT. You may be liable for the VAT after that point and may have an outstanding liability with the Revenue. Consult a professional adviser.

If you didn't exceed the limit by much, they may simply take the view of "charge it from now on, don't worry about last year".

Also you did have more than one contract (i.e. with different businesses) in the year, didn't you?

Tazz T

My case is certainly a grey area. I applied for a job at an advertising agency and was taken on on a trial basis at an agreed rate per month and told to look after the tax myself. So my tax was to be self-assessed. The job that was there wasn't there anymore and I found myself working there for well over a year on that basis. So not really a sole trader and not PAYE.

It's a bit mad, because if I was just another employee, then there would be no question of me paying VAT. so if I do, I'm paying like 63% tax.

MartMax

my working knowledge is limited, but will try to get basic right.

I went over the limit last year working for a company but I never charged them VAT, so where do I stand.

diff VAT rates apply to diff type of products and services. some professional services provided might also liable to professional withholding tax. Revenue website also says,

"Any person (including a company) receiving a payment from an accountable person in respect of professional services is liable for the tax."

My case is certainly a grey area. I applied for a job at an advertising agency and was taken on on a trial basis at an agreed rate per month and told to look after the tax myself. So my tax was to be self-assessed. The job that was there wasn't there anymore and I found myself working there for well over a year on that basis. So not really a sole trader and not PAYE.

If you are not PAYE, then you are self-employed, well u still have to pay income tax. Plus, you can't claim PAYE tax credit.

If you didn't exceed the limit by much, they may simply take the view of "charge it from now on, don't worry about last year".

Revenue will always make you worry about your financial and tax history. They have a method of digging your grave - they call it "Revenue Audit"

I'd say that I agree with Vector - if you are uncertain, consult an accountant or tax advisor. You surely don't want the Revenue dig your grave hole while you are resting in there after so many years.

antoinolachtnai

Well, if you only worked for one company, you weren't incorporated, you weren't registered for VAT, you don't have a private pension scheme, you didn't have a written contract, you worked at your customer's office, your hours were set by your customer, and you were 'just like another employee' then the revenue would probably be within its rights to get aggressive with your customer and argue that they should have treated you as a PAYE employee. Most importantly, they haven't paid employer's PRSI in regard to your salary, which is likely to be a couple of grand.

I don't mean to fluster you, but the matter could turn out to be less grey and more black than you think. It would likely be your customer who would bear the brunt of the blackness rather than you. But of course, what's bad for your customer will inevitably end up being bad for you. Don't worry, there is one thing in your favour, the fact that you aren't working for that customer any more.

You only have to pay VAT if you itemized and charged VAT on the invoices you submitted. (You didn't, did you?!) Don't worry about that for now. If it was a business to business transaction, there is really no net loss to the VAT man, even if you didn't quite follow the rules. At the end of the day, the revenue are like everyone else in business - they just want their money -. They're not going to bother you about something like that (it would be different if you'd been doing the work for non-VAT registered consumers).

Don't worry about witholding tax. Professional witholding tax is only applicable in relation to doing consulting work for state- and semi-state organisations, in my experience. It's up to the 'accountable person' who pays your invoice to hold on to a portion of the invoiced amount and remit it to the Revenue.

However, your overall situation needs some attention by the sound of it, so I would find an accountant if I were you, and go through all the issues. It can all be sorted out easily enough, but be sure to deal with it soon.