Advice on VAT Audit

James Wan

Hi,

A month ago we submitted our 4 monthly vat return which was a refund (approx €800). The local vat office called and asked for a list of all purchase/expense & sales vat. Which I supplied. In my return I had wrongly claimed VAT on food/drinks (mainly coffees when meeting clients in hotel lobbies etc.) When they carried out their review it reduced our refund by €85. They now have asked to come out to inspect the books for this four months but may look back at previous returns in 2010.

1) I know that in previous returns I will have made the same mistake regarding food/drinks, should I calculate what I over claimed in the two prior returns and give them the amount when they arrive?

2) We have a home office and for income tax I would addback two thirds of our light & heat when doing our accounts but I have claimed the full vat on the bills is this wrong? or should I have claimed back just one third of the VAT or any of the VAT at all? If I treated this wrong should I just calculate the over claim and offer it to them rather than waiting for them to find it?

Any advice on how to handle the two instances of over claiming VAT will be greatly appreciated. In your experience when they come to do a vat audit do they just stick to VAT or would they change focus on the day and look into income tax as well.

Thanks,
James

nompere

A Revenue audit can cover every taxhead, and can go back to previous years in some circumstances.

Talk to your accountant.

James Wan

Thanks Nompere for your reply. Have you any experience of revenue audits re vat where they then decide to look at other tax areas? Also have I treated the VAT on my electricity bill correctly?

Thanks again,

James.

Bookkeeper09

Technically speaking you should not be claiming back the VAT on the personal element of your light and heat.
You should review prior periods and calculate the VAT that you have overclaimed.
Am dealing with a revenue audit this week that was initially for VAT and is not being extended to PAYE/PRSI and CT, so yes it does happen.

nompere

James Wan wrote: »

Have you any experience of revenue audits re vat where they then decide to look at other tax areas?

Yes - we got into corporation tax on one occasion.

James Wan wrote: »

Also have I treated the VAT on my electricity bill correctly?

I don't think so - but Revenue auditors aren't encouraged to spend significant time on small amounts.

Search www.revenue.ie for "revenue audit" and the official guide to Revenue Audit is the first link. You need to read it - but even more you need advice from your accountant. Trying to handle a Revenue audit without professional help may well prove to be disastrous.

James Wan

Thanks Bookkeeper 09 & nompere for your help and information. I will review prior periods and call my accountant once I have this done.

James.

backtothebooks

Hi James,

My understanding is that you get an opportunity to make a voluntary disclosure at the commencement of an audit. If you have made errors then you should be in a position to explain them before the audit commences. This mitigates the impact on any penalties that the Revenue may charge if they uncover errors.

You're not entitled to claim back Vat on food and drink, nor can you claim it back on the personal element of expenses (ESB, Phone etc..)

I agree with Nompere, you're probably much better off to talk to your Accountant and ask them what the best plan of action is,

I hope this helps

James Wan

Thanks back to the books

BBBDigital017

And dont think just because you ahve been good you will be treated fairly , worst day ever

barneystinson

BBBDigital017 wrote: »

And dont think just because you ahve been good you will be treated fairly , worst day ever

U ok Hun? x