Does a booking deposit incur VAT?

bigred

Howdi
Just took my first booking today for my photo business. Quick question - is there a VAT portion I am liable for? Just a little confused, as the deposit isnt really for any goods or services. Do I just record this as zero rated and apply VAT to the total figure when I invoice the client for the full amount?

kluivert

Are you registered for Vat on a cash receipt basis?

From an accounting point of view a deposit or payments on account is a liability in your books.

To Answer your question:

If you are registered on a cash receipt basis rather than invoice and taking a deposit is part of the nature of the business and this deposit will not be repayed for sure then charge Vat otherwise dont till you get full payment.

vector

I'm not an accountant but I'd say...
According to revenue.ie the good/service known as a "PHOTOGRAPHER" and "PHOTOGRAPHIC DEVELOPMENT AGENCY SERVICES" has a VAT rate of 13.5%

Because a deposit is in essence just a part of your fee that you happen to receive in advance of provision, rather then after provision of the service/good, it forms part of the normal fee for the good/service named above.

Victor

I agree, it incurs VAT (subject to kluivert's comments). You are providing a VATable service, merely by agreeing a time and place with the client, even though no actual service might be carried out or no goods handed over.

A parallel, but reverse position is where a client withholds money from a builder (under a contract) for a defects liability period. The Revenue held that merely providing a service (that might never be called upon) is VATable.

antoinolachtnai

If they don't come back and actually get the work done (i.e., they forfeit their deposit) you would need to pay VAT on it. So yes, I would say there is VAT due on it.

If you don't charge VAT on the deposit, you will make your other bookkeeping more awkward. You will end up having to charge some uneven amount of VAT when the final amount is paid.

bigred

Message received and understood.
Yes - I'm registered on a cash receipt basis.
Revenue will get their chunk this period.
Thanks