2 x VAT queries

Stainless_Steel

Hi all,

Newbie sole trader here with VAT queries!

1:

I will be purchasing a new PC soon. It will be used about 50:50 between personal use (games!) and business use (software development).

How would the VAT reclaim work?

2:

I've been given €300 worth of IT equipment for free. I intend to sell this on. Do I charge VAT @ 21% ?

Thanks!

mari2222

Are you sure that you are registered for VAT?
If so then you will charge VAT on sales. You will remit that VAT to the revenue commissioners. If you didnt pay VAT (as they were free) you will not reduce your VAT payment by the amount of VAT that would normally be charged to yourself on purchasing in stock.

With the new PC being 50:50 it seems to me that you should not deduct half of the VAT you pay for it.

Does that seem logical?

Stainless_Steel

mari2222 wrote: »

Are you sure that you are registered for VAT?
If so then you will charge VAT on sales. You will remit that VAT to the revenue commissioners. If you didnt pay VAT (as they were free) you will not reduce your VAT payment by the amount of VAT that would normally be charged to yourself on purchasing in stock.

With the new PC being 50:50 it seems to me that you should not deduct half of the VAT you pay for it.

Does that seem logical?

Thanks a mill for reply!

Understood re charging VAT on my freebie goods.

But claiming 50:50 seems a bit vague to me. Like 50:50 is just an estimation. For example, if I end up running low on software development work (business use) I will probably play more games! Am i committing an offence by changing the proportion of business:personal use?

mari2222

No, it just means you guessed wrong at the proportion when you bought it - if things pan out differently to what you expect then you could adjust appropriately in a later return; you dont need to log the time or anything, just make an honest assessment of the use.

george507

It is just a minor issue, Revenue won't care what you do unless you make money

Stainless_Steel

Thanks for the help.

I have another query!

The revenue website states those earning less than a certain threshold (37k a year I think) don't have to register for VAT. How would one then pay the VAT they've collected on sales?

Frynge

my understanding is they wouldn't pay any as the amount of VAT owed to the revenue would be negligible.

ie. you would spend so much time sorting the returns and they would have to spend a certain amount of time processing it, and in the end the net amount would possible be negative

exaisle

Your understanding is incorrect.

If you're not registered for VAT you dont charge any on your sales so there's none to hand over to Revenue.

Frynge

yes i should have phrased it better

you wouldn't act as a collector of VAT which is you don't pay VAT or charge it

exaisle

However.....if you are dealing exclusively with VAT registered customers, you would probably be marginally better off registering for VAT, as you could reclaim VAT on your inputs/purchases.....

Perhaps have a word with a competent accountant...if you can find one ;-)

Frynge

You could claim back the VAT but if an accountants fees exceed your possible returns this would be impractical

exaisle

You could claim back the VAT on the accountant's fee also...