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VAT 4A procedure explanation

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  • 16-10-2009 1:19pm
    #1
    lougem
    Closed Accounts Posts: 29 ✭


    Hi I'm not sure if this is the right plact to be posting this, or if there was a post already on it, but I was wondering if you could give me some feedback. I need to write a simple explanation of the VAT 4A/ form 4B procedure for leases. would anyone have any suggestions for the following:

    The 4A procedure
    • Can only be used in the case of a lease of at least 10 years.
    • Landlord and tenant must apply jointly to the Revenue Commissioners, and must do so before the lease is signed.
    • If a VAT 4A authorisation is given under Section 4A of the VAT Act 1972, the VAT accounting responsibility is from then on transferred to the tenant: the landlord will not charge VAT, and the tenant must account for it in his/her VAT return.
    • The tenant claims a matching deduction for the VAT in this return in the Form 4B.
    • This means that money never actually changes hands. The money which is officially paid to the Revenue Commissioners is simultaneously ‘repaid’ by them.

    thanks in advance.


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    #2
    censuspro
    Registered Users Posts: 881 ✭✭✭censuspro


    lougem wrote: »
    Hi I'm not sure if this is the right plact to be posting this, or if there was a post already on it, but I was wondering if you could give me some feedback. I need to write a simple explanation of the VAT 4A/ form 4B procedure for leases. would anyone have any suggestions for the following:

    The 4A procedure
    • Can only be used in the case of a lease of at least 10 years.
    • Landlord and tenant must apply jointly to the Revenue Commissioners, and must do so before the lease is signed.
    • If a VAT 4A authorisation is given under Section 4A of the VAT Act 1972, the VAT accounting responsibility is from then on transferred to the tenant: the landlord will not charge VAT, and the tenant must account for it in his/her VAT return.
    • The tenant claims a matching deduction for the VAT in this return in the Form 4B.
    • This means that money never actually changes hands. The money which is officially paid to the Revenue Commissioners is simultaneously ‘repaid’ by them.

    thanks in advance.

    The 4A mechanism isnt relevant anymore under the new VAT on property rules.

    The 4A mechanism was effectively a cashflow mechanism. It allowed the tenant to pay the landlord net of VAT. Rather than paying VAT on the caiptalised value of the lease and claiming it back on the next VAT return, the tenant pays teh landlord net of VAT and self accounted for the VAT on their next VAT return. The transaction is VAT neutral provided both parties are VAT registered.


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