Invoice matters

esperanza

I have just set up my own business and one of my clients want vat number on my invoice. However, I'm not regsitered for vat and don't need to be. Is there some other number I have to put on the invoice?

Kinetic^

No, if you're not VAT regustered then you've no VAT number. How can you give him something you don't have? Just tell him you're not VAT registered. SHouldn't be a problem at all.

vector

in future at the end of the invoice in the "thank you for your business" boiler plate add some text to the effect of "For the avoidance of doubt MYNAME is not registered for VAT"

or the more elegant
"This is not a VAT invoice"

however the latter suggests that the document is an advisory "fee note" (like that of a solicitor) sent for the client to peruse and that an actual VAT invoice will be sent later

ircoha

This poses an interesting qustion.

OP is not required to register for VAT, presume beacuse of startup not enough T/O yet

Who must register for VAT?

You must register for VAT if you are a taxable person and your annual turnover (i.e. the amount of your receipts excluding VAT) exceeds or is likely to exceed the following annual limits


€55,000 in respect of the supply of goods
€27,500 in respect of the supply of services


or
Exempted goods and services:
These include financial, medical and educational activities.

Assuming it to be not an exempt activity, is he permitted to charge his client VAT and keep it until he reaches the threshold?

drdre

ircoha wrote:

This poses an interesting qustion.

OP is not required to register for VAT, presume beacuse of startup not enough T/O yet



Assuming it to be not an exempt activity, is he permitted to charge his client VAT and keep it until he reaches the threshold?

what happens if he does not reach the threshold.what happens then? i am curious as i am also starting a small company and want to find out how it works as my invoice will not have a vat number on it.

misterq

ircoha wrote:

Assuming it to be not an exempt activity, is he permitted to charge his client VAT and keep it until he reaches the threshold?

No, thats VAT fraud.
If you are registered for VAT, you are collecting VAT on behalf of the government.

If your not registered for VAT, you should not be collecting it.

If your sales are under a certain level, the government don't see it was worth their while to bother getting you to collect it, so you don't have to register.

drdre

misterq wrote:

No, thats VAT fraud.
If you are registered for VAT, you are collecting VAT on behalf of the government.

If your not registered for VAT, you should not be collecting it.

If your sales are under a certain level, the government don't see it was worth their while to bother getting you to collect it, so you don't have to register.

ok if you donot register for vat, then is it not possible for the customer to claim back vat from the government.can i not give a price 15.99 +vat or do i just give the full price of 19.35.
thanks for the help

Sonnenblumen

esperanza wrote:

I have just set up my own business and one of my clients want vat number on my invoice. However, I'm not regsitered for vat and don't need to be. Is there some other number I have to put on the invoice?

All Invoices (irrespective of whether VAT is included/not) must clearly state

- Invoice Nr and
- Invoice Date.

esperanza

In fact, you have to quote your PPS number on the invoice if you have no VAT number. I called the Revenue office to find out.

Foreign clients may not be happy about this, as they expect it to be much more formal, but I guess it is easy to check whether you have been paying your social security contributions or not with a PPS number.

Not sure if there's a particular invoice format to follow though, does anyone know where templates can be found?

esperanza

Another question:

If you set your business up in September 2006, you file tax returns in October 2007. Is that correct?

vector

esperanza wrote:

In fact, you have to quote your PPS number on the invoice if you have no VAT number. I called the Revenue office to find out.

That sounds resonable

HOWEVER

The Department of Welfare have say
"...2.1.2 Who can not use the PPS Number?... Private companies or bodies, other than in transactions with public bodies.
* Any person or body not authorised under legislation to do so."
http://www.welfare.ie/topics/ppsn/cop.html#2.1.2

Thus if you are a sole trader and your customer is a private company then that private company cannot use your PPS number. The wording is open to interpretation I read it as saying that because a private company cannot use the number then you should not supply it on your invoice.

and indeed I (a sole trader) hope this is true I don't want to tell people my PPS number

okellyc

vector wrote:

That sounds resonable

HOWEVER

The Department of Welfare have say
"...2.1.2 Who can not use the PPS Number?... Private companies or bodies, other than in transactions with public bodies.
* Any person or body not authorised under legislation to do so."
http://www.welfare.ie/topics/ppsn/cop.html#2.1.2

Thus if you are a sole trader and your customer is a private company then that private company cannot use your PPS number. The wording is open to interpretation I read it as saying that because a private company cannot use the number then you should not supply it on your invoice.

and indeed I (a sole trader) hope this is true I don't want to tell people my PPS number

Sorry, but my reading of the same line (2.1.2 above) is that the "private company" referred to is the issuers of the invoice, not the recipient, i.e. if you're a private company you can't be quoting a PPS number on your invoice, cos you have to go and get a company number and VAT number. If you're a sole trader dealing with a private company customer however, just use your PPS as described in other posts.

As for not wanting to tell people your PPS, bad news there because when you apply for a VAT number as a sole trader all they do is take your PPS number and shove "IE" before it and issue it to you as your VAT number (except in the very rare case where it has already been issued to some other body corporate by sheer coincidence).

vector

>my reading of the same line (2.1.2 above) is that the "private company" referred to is the issuers of the invoice, not the recipient

agreed

>As for not wanting to tell people your PPS, bad news there because when you apply for a VAT number as a sole trader all they do is take your PPS number and shove "IE" before it and issue it to you as your VAT number (except in the very rare case where it has already been issued to some other body corporate by sheer coincidence)

agreed

however in real0life I have never seen an invoice issued by a sole trader that mentions a PPS number, some successful ones have VAT numbers (which are in effect their PPS numbers prefixed with IE) but the sole traders who are not registered for VAT never have their PPS numbers, just Name, Address, Phone, Fax, Email, Item name, Item Cost, Item Qty, Sub Total, Discount, Total

okellyc

True, I'm the same. Its either there on the invoice or it isn't.

Getting back to the original query, if you're not registered for VAT then that's fine and shouldn't put you at a competitive disadvantage. I'm sure the companies you're invoicing don't think you're an Abramovich oil company size organisation anyway. The only reasons they look for VAT numbers is:
1. to verify that you are registered and that they're not just handing over an extra 21% for you to go spend it as you see fit (only big companies with finance departments will verify the numbers)
2. Large companies have to file what's called a 3rd party VAT return listing any supplier to whom they paid more than £3000 in VAT (sorry, no idea what the 2006 level is in euro, its back in 1996 that I nearly died of boredom doing this for a multi-natioanl on my summer job in accounts) as another way for the Revenue to make sure everyone pays their taxes, both VAT and income tax/ corporation tax.
Be straight with the guy looking for it, say you're not registered for VAt so won't be charging him it and he'll be happy with that. He'd only have been paying it to you and claiming it back against the VAT on his sales anyway so it all cancels out.

vector

esperanza wrote:

In fact, you have to quote your PPS number on the invoice if you have no VAT number. I called the Revenue office to find out.

ok, but I've found that with large organisations the answer you get on the phone to a non-frequent question varies depending on who you speak to.

so the only authorative answer must come from some written source, that is often an internal document, but in the case of a public body it is accessible as an act or statutory instrument

I've searched the online statute book but can't find any mention, can anyone else find a written reference to "invoice" AND "pps" OR "ppsn" OR "personal public service number"

ednwireland

drdre wrote:

what happens if he does not reach the threshold.what happens then? i am curious as i am also starting a small company and want to find out how it works as my invoice will not have a vat number on it.

they way i was told it worked (micro-enterprise training with local development) if you dont register for vat and you end up going over the threshold you end up having to pay vat on ALL your transactions so you end up 21% down because you cant go back and claim it from you customers. (this has always seemed dumb to me)
if you register and dont reach the limit ( my current situation but i'm too close for comfort) you collect the vat and pay it to the revenue thats it its not your money anyway your collecting it for the revenue. the only advantage it offers me is i buy a fair amount of parts for work so i can claim it back. if i wasn't vat registered i woudlnt be able to claim the vat back.

so i'm vat registered under the threshold i put vat om my invoices and pay it the revenue i operate just like i would if i was over the threshold.

actually a financial advisor recommended that if you might go over the threshold you should register because you dontget caught as above (it actually happended to sme business on the scheme and they got hit by a huge vat bill)

RDConfoosed

I started own business few months ago and although I dont have to at this stage I am registered for VAT. It's just easier to do it straight away than worry about it further down the line. as ednwireland said you can also claim back VAT on business related expenses.

jrey1981

Put "VAT: inclusive" on the invoice.

This covers you if you register for VAT at a later date, and secondly means your customer can reclaim the VAT.

As long as the value of the transaction isn't huge, there should be no problems with this, and it's a win-win.

White Van Man

jrey1981 wrote:

Put "VAT: inclusive" on the invoice.

This covers you if you register for VAT at a later date, and secondly means your customer can reclaim the VAT.

As long as the value of the transaction isn't huge, there should be no problems with this, and it's a win-win.

Sorry, but I don't agree with that at all.

If you're not VAT-registered you can't charge VAT, and definitely shouldn't be putting a statment on your invoice saying VAT is included in the price (as you have no right to charge it).

If you're waiting on your VAT registration being processed, you invoice the client in the meantime with a statement at the bottom saying "This is a non-VAT invoice". When you have your VAT number you can send them a "VAT-only" invoice for 21% of the value of the non-VAT invoice.

jrey1981

that's all well and good as long as your client is informed so they don't get a surprise request for another 21%.

White Van Man

If you've invoiced a client in the way I've decribed *after* you've registered for VAT, but before you receive your VAT number it's perfectly above board whether you've informed the client of the situation or not. Obviously, informing the client in advance that he's going to receive an VAT-only invoice in addition to his Non-VAT invoice would endear him to you a bit more. All nice and legal.

Unlike your suggestion, which basically amounts to fraud. :cool:

jrey1981

My suggestion in no way implied that the OP should keep the money himself, since it assumed he was going to approach the threshold in the near future at which time he would make a vat return.

Did I say at any point that he should keep the money? No

Sonnenblumen

jrey1981 wrote:

Put "VAT: inclusive" on the invoice.

This covers you if you register for VAT at a later date, and secondly means your customer can reclaim the VAT.

As long as the value of the transaction isn't huge, there should be no problems with this, and it's a win-win.

Absolute nonsense and if caught doing this you will find yourself inpotentially a very serious situation with the VAT people. Be warned, never mess with the VAT guys, they have powers way above general Revenue etc.

Its all bloody simple, if only people knew what they were talking about!

If you are registered for VAT, every invoice must clearly state your VAT Nr, the VAT rate and the amount of VAT charged. This info is required by your customer in case of any queries raised at his end on VAT Claims.

If you are not registered for VAT you cannot charge VAT and/or seek VAT refunds on your purchases. The latter will put you at a competitive disadvantage on the basis of paying higher costs than competitors. Charging VAT without being registered is a very serious and fraudulent activity.

There is no problem doing business transactions without a VAT nr, apart from the optics of (a) appearing small and (b) presumably a new co.

Once revenue exceeds the VAT thresholds you must register for VAT. The thresholds are modest so as was suggested, better to register for VAT sooner than later. Also opt for VAT3 filing every 2 months, might be better for managing the cash flow.

Sonnenblumen

jrey1981 wrote:

Current vat fraud in the past 5 years in the EU has been in the tens of billions of euros. The vat man has bigger fish to fry. Google "Dylan Creaven". UK vat losses are also in the tens of billions of pounds.

If you can't save a client 21% but a competitor can, who is your client going to deal with?

Talking through your hole, why don't you go somewhere and play with something instead of encouraging to commit offences on a risk basis. Idiots like you should be accompanied by adults.

Client is more likely to interested in doing business with a compliant but legitimate company and not some shady deal. There is no additional costs for VAT registered customers.

Like I said go off somewhere else!

esperanza

This jrey guy doesn't seem to have a clue what he's talking about!!!

In fact, for a services company the VAT limit is quite high at approx. EUR 27,000. So, if you're a one-person show then, it would be quite difficult to exceed this limit in a year. Also, clients are more willing to do business with you if you are not registered for VAT, as your rates are lower!

I've realised that VAT registration is only really interesting for goods companies, services companies wouldn't be necessarily buying new equipement that often (I haven't needed to buy anything as I already had all the equipment).

There are some countries though, such as France, where companies kind of react suspiciously if you say you have no VAT number.

krattapopov

Sorry resurrecting an old thread, but it came up on a search...

In relation to everything that was spoken about on this thread, here is my query... I've been asked to run a one day training event, 3 or 4 times a year. My fee would be approx 550 a day. Now I don't have a registered company, therefore am not registered for VAT!

From my understanding on this thread, I can invoice the company for the fee and say that I am not registered for VAT... and that should all be ok, once I stay under that initial threshold - which I definitely will.

Is this understanding correct?!

duploelabs

krattapopov wrote: »

Sorry resurrecting an old thread, but it came up on a search...

In relation to everything that was spoken about on this thread, here is my query... I've been asked to run a one day training event, 3 or 4 times a year. My fee would be approx 550 a day. Now I don't have a registered company, therefore am not registered for VAT!

From my understanding on this thread, I can invoice the company for the fee and say that I am not registered for VAT... and that should all be ok, once I stay under that initial threshold - which I definitely will.

Is this understanding correct?!

Both registered companies and sole traders have to register for vat if you've exceeded the thresholds detailed about (although i can't remember if this has changed)

krattapopov

Cool thanks for the reply mate, I suppose I'm saying that, if I only invoice 2200 for a year, do I have to register for VAT? Or can I just invoice, with no VAT figure, stating I'm not registered for VAT?!

Sorry, having a blonde day.

jimmii

krattapopov wrote: »

Cool thanks for the reply mate, I suppose I'm saying that, if I only invoice 2200 for a year, do I have to register for VAT? Or can I just invoice, with no VAT figure, stating I'm not registered for VAT?!

Sorry, having a blonde day.

Yeh you're way under the vat threshold there so no need to worry about registering yet. Even if you were doing them weekly you wouldn't need to worry for services it's €37.5k.

StupidLikeAFox

You will still have to declare the income to revenue though - you can get away with a simpler eForm 12 as opposed to a Form 11 - I think its more straightforward.

Not an expert in this stuff so I would do your research around that side of things if I were you

http://www.revenue.ie/en/personal/faqs/eform12-faqs.html

http://www.irishtimes.com/business/personal-finance/everything-taxpayers-need-to-know-about-the-new-form-12-1.1817653

krattapopov

Thanks guys - great to know I can proceed without having to register at this point in time - and yeah, absolutely would have to declare the income.

Appreciate the help

selfi

esperanza wrote: »

I have just set up my own business and one of my clients want vat number on my invoice. However, I'm not regsitered for vat and don't need to be. Is there some other number I have to put on the invoice?

If you are sole-trader you should put on invoice your PPS number (but check it with Revenue).
If you are Ltd. then put your Corporation Tax Number (you need to apply for it).