VAT receipts for new builds?

fairky

Can I ask if anyone has done a self Build and after the Build is completed received a letter from the Revenue re VAT and receipts ?

kkelliher

fairky wrote: »

Can I ask if anyone has done a self Build and after the Build is completed received a letter from the Revenue re VAT and receipts ?

If they were to go down this route it would make for interesting review on how the cost of building was to suddenly jump.....

fairky

Its just my brother built a house in 2008 and after completing his build got a letter from the revenue asking about VAT and to produce receipts has anyone else heard of anyone that has got one of these letters

fclauson

north or south of the border ?

ShiverinEskimo

They do spot checks and the unofficial word is they generally target direct-labour self-builds when there is the most chance of cash-in-hand work being done.

My engineer is pretty particular about me getting VAT receipts from anyone because they are cracking down apparently due to the recession. And I'm using a contractor.

ECO_Mental

fairky wrote: »

Its just my brother built a house in 2008 and after completing his build got a letter from the revenue asking about VAT and to produce receipts has anyone else heard of anyone that has got one of these letters

I'd believe that... the revenue are ruthless these days and there's nothing they would do that would surprise me if they got a sniff of of some cash back.

My attitude is pay your tax no matter how it hurts they will catch up with you in the end and they do they will double down on yo a** when they do.

Friends of mine who were self employed (in the pharma/IT sector atm) or were up to a couple of years ago are being put through the mill atm for claiming mileage traveling to and from their place of work. They are being caught for between some figures I hear of €50-70k with interest and penalties added. These are one man show operations and now out of work more than likely as well.

So be careful

john_cappa

If you are given a price for work then that is the price? is it not the responsibility of the tradesman to give 13.5% up?

muffler

A few posts above moved from the Prices/costs forum.

hexosan

So is it then the responsibility of the self builder to make sure the trade you employ is tax compliant. I would of assumed that if you were priced say 10k by a block layer it would be his responsibility to pay his VAT contribution from this amount.

sydthebeat

john_cappa wrote: »

If you are given a price for work then that is the price? is it not the responsibility of the tradesman to give 13.5% up?

NOPE !!!

http://www.revenue.ie/en/tax/rct/

sydthebeat

hexosan wrote: »

So is it then the responsibility of the self builder to make sure the trade you employ is tax compliant. I would of assumed that if you were priced say 10k by a block layer it would be his responsibility to pay his VAT contribution from this amount.

again, nope..... thats a dangerous assumption to make

http://www.revenue.ie/en/tax/rct/

tedimc

Does the word 'Contractor' not exclude the general self-builder, who I presume is PAYE?

If RCT applies, then I would have thought anybody getting even small works done on the home would be in this bucket - bathroom re-tiled, room painted, even the bloody lawns cut!!

sydthebeat

tedimc wrote: »

Does the word 'Contractor' not exclude the general self-builder, who I presume is PAYE?

If RCT applies, then I would have thought anybody getting even small works done on the home would be in this bucket - bathroom re-tiled, room painted, even the bloody lawns cut!!

as far as i know, the definition of a direct labour build in revenue terms means the self builder becomes the PRINCIPLE CONTRACTOR and liable for these taxes.

im not an expert and you should get clarification from revenue on this, but thats what i understand.

obviously the whole idea from revenue is that NO black market 'nixers' occur, so yes, if payment is received for labour given then a tax is liable.

Where self builders are hit is that, when there is a mortgage, there a clear and obvious "out goings" of monies which should be validated.

tedimc

Good to know - I pay enough tax without getting screwed over because someone else isn't paying theirs!

sydthebeat

tedimc wrote: »

Good to know - I pay enough tax without getting screwed over because someone else isn't paying theirs!

if your hoping to do a "direct labour" build then the link above is vital reading.

woodoo

What happens if you kept no receipts for anything.

ShiverinEskimo

woodoo wrote: »

What happens if you kept no receipts for anything.

You get in heaps o trouble.

martinn123

The first point is if you are claiming Mortgage Relief for Tax purposes, if so, if you spend say 100K, you need receipts, including VAT

Secondary, the links already posted, show the ''Self Builder'' is the Main Contractor, and responsible for the ''Tax'' due on the subbies payment, without a C2

wirehairmax

If indeed the Revenue are targeting self-builds, I would welcome it but they are about 5 years too late.
I never understood why self-builders were not made to account for every cent of a mortgage. A mortgage of 2-300k is a decent turnover for a small business and it baffles me why direct labour builds are not subject to the same accounting and revenue practices as a business. There should be no cash paid from a mortgage and all transactions should either be by cheque or bank transfer and so be fully traceable. How do banks hand out that sort of money and not want a full set of accounts to show how it was spent?
It would be great to see Revenue, HSA and Building Control take active interest in direct labour builds as what has been happening for the past few years has been unbelievable to say the least when it comes to the black market, lack of safety on sites and poor standards of work.

sas

Having been intrigued by this thread, I took a wander through the links and came across this:

http://www.revenue.ie/en/about/foi/s16/income-tax-capital-gains-tax-corporation-tax/part-18/18-02-02.pdf?download=true

Can someone please reference the section of this that makes a self builder a principal contractor for rct purposes?

I'm no tax expert but I don't see how this could apply to self builders based on that link.

wirehairmax

sas wrote: »

Having been intrigued by this thread, I took a wander through the links and came across this:

http://www.revenue.ie/en/about/foi/s16/income-tax-capital-gains-tax-corporation-tax/part-18/18-02-02.pdf?download=true

Can someone please reference the section of this that makes a self builder a principal contractor for rct purposes?

I'm no tax expert but I don't see how this could apply to self builders based on that link.

You're correct in what you are saying. Unless self-builders are made to register as a main contractor and RCT, they are under no obligation to be liable for RCT on a sub-contract. I think the initial post has been lost along the way. What I undestood in the OP was that Revenue wanted to see receipts and invoices from contractors and suppliers and that it is they who would be investigated for failing to issue receipts and not declaring payments.
It would still be a good thing if Revenue were to pay more interest in this sector though.

wirehairmax

kkelliher wrote: »

If they were to go down this route it would make for interesting review on how the cost of building was to suddenly jump.....

Maybe then we'd get a true and actual cost of some of these miracle houses, which if you believe what you read around here sometimes, that seem to be built and paid for with magic beans.

daver123

wirehairmax wrote: »

Maybe then we'd get a true and actual cost of some of these miracle houses, which if you believe what you read around here sometimes, that seem to be built and paid for with magic beans.

Get a contractor from the north of ireland to do the job and you dont have to pay vat

fairky

But what if all your Trades are from Northern Ireland ? How can the Irish Revenue pursue these ?

fclauson

daver123 wrote: »

Get a contractor from the north of ireland to do the job and you dont have to pay vat

Not true

fairky wrote: »

But what if all your Trades are from Northern Ireland ? How can the Irish Revenue pursue these ?

called cross EU data sharing

kkelliher

daver123 wrote: »

Get a contractor from the north of ireland to do the job and you dont have to pay vat

I dont think that is technically correct. If the contractor exceeds the threshold of work in the south would he not be required to register for vat in the south?

Villain

A self build house is no Different to any expenditure a person makes, i.e. someone paying a person to clean their windows or cut their grass the quantity of work makes no difference. I had this argument with an accountant when I started building, he eventually agreed there is no difference.

The process for stage payment certs is an Engineer with the required qualifications says the work to that value has been completed, that is accepted by the Bank.

hexosan

Can anyone answer this

1. So how long is a self builder required to keep receipts if revenue decide carry out an audit.

2. If a friend in the construction game carries out a trade and doesn't charge for the labour how does this work.

Thanks

fclauson

hexosan wrote: »

Can anyone answer this

1. So how long is a self builder required to keep receipts if revenue decide carry out an audit.

7 years is the norm - same as you tax return

ShiverinEskimo

hexosan wrote: »

2. If a friend in the construction game carries out a trade and doesn't charge for the labour how does this work.

Thanks

13.5% of €0.00 is €0.00.

sas

fclauson wrote: »

7 years is the norm - same as you tax return

Where is this coming from?

The link I posted above in my opinion clearly rules out the conclusion reached here that the "self builder" is the "principal contractor" in the vast majority of cases.

fclauson

SAS - just to clarify my comments

I was just saying that any tax documents upon which you may need to rely upon in the future should normally be kept 7 years

I am not saying if a specific project/engagement/self-build needs them kept or not.

kkelliher

fclauson wrote: »

SAS - just to clarify my comments

I was just saying that any tax documents upon which you may need to rely upon in the future should normally be kept 7 years

I am not saying if a specific project/engagement/self-build needs them kept or not.

I understood it to be 6 six years that you must hold records as a self employed person but I am open to correction

muffler

kkelliher wrote: »

I understood it to be 6 six years that you must hold records as a self employed person but I am open to correction

I know from filling in a form earlier in the week to claim tax relief on dental treatment the receipts are to be kept for 6 years. The way that works is that you claim the amount spent but you DONT send in any receipts. However they do say that the receipts must be retained for 6 years should Revenue wish to examine same.

hexosan

Doesn't seem fair that you can only claim back 4yrs but revenue can go back 6yrs.

kkelliher

hexosan wrote: »

Doesn't seem fair that you can only claim back 4yrs but revenue can go back 6yrs.

I dont think anyone is going to argue that fairness and revenue (well tax) cant be mentioned in the same sentance.

sydthebeat

my reading of it from
http://www.revenue.ie/en/tax/rct/cif-presentations/construction-faqs.html#sectiona6

is that when a main contractor is involved the RCT requirements are carried out by them.

with a self build in effect the self builder is the main contractor therefore is subject to the same tax implications. I cannot find any exemption for the fact that the build is for the main contractors own habitation, but i will chase this up.

kkelliher

sydthebeat wrote: »

my reading of it from
http://www.revenue.ie/en/tax/rct/cif-presentations/construction-faqs.html#sectiona6

is that when a main contractor is involved the RCT requirements are carried out by them.

with a self build in effect the self builder is the main contractor therefore is subject to the same tax implications. I cannot find any exemption for the fact that the build is for the main contractors own habitation, but i will chase this up.

Syd I am sure your correct to be fair and I would be supprised if it was read any differently by revenue.

sas

sydthebeat wrote: »

my reading of it from
http://www.revenue.ie/en/tax/rct/cif-presentations/construction-faqs.html#sectiona6

is that when a main contractor is involved the RCT requirements are carried out by them.

with a self build in effect the self builder is the main contractor therefore is subject to the same tax implications. I cannot find any exemption for the fact that the build is for the main contractors own habitation, but i will chase this up.

This is going to read like I'm foaming at the mouth...

The actual first line of that reference rules out the self builder.

"For RCT to apply, the homeowner must be a principal for RCT purposes i.e. a person carrying on a business which includes the erection of buildings or the development of land, or the manufacture, treatment or extraction of materials for use in construction operations, or a person connected with a person (which includes any individual, company or any unincorporated body of persons) carrying on such a business."

Self builders are not running a business erecting buildings. I'm really struggling to understand where the confusion is arising. The previous link I provided covers the definitions of what makes someone a "principal contractor" and none of it can be applied to the self builder.

Villain

Sas I really can't see the confusion either, self build people are not the same as building contractor! They are not involved in a business.

mickdw

It is crazy to suggest that a homeowner be they building a wall, an extension or a new house would have to behave in the same manner as a building contractor from a tax view point.
To expect a self builder to be aware of the rct procedures and handle the various tax liabilities around this is nonsense.
As far as im concerned, if a self builder or any homeowner has invoices from works completed and record of cheque payment, they must be in the clear.
The rules are pretty clear for c2 registered subcontractors too. When working for main contractor, vat is held by main contractor and paid direct to revenue. When sub contractor works for non registered individuals, he must be paid the vat and return it to revenue as normal with vat accounts every 2 months.
Basically, selfbuilder simply pays subcontractor vat Inclusive figure and thats it.

sas

mickdw wrote: »

As far as im concerned, if a self builder or any homeowner has invoices from works completed and record of cheque payment, they must be in the clear.
.

Disclaimer: I'm not trying to support the concept of the black economy here...

I don't even see why the homeowner needs to produce\retain invoices.

The subcontractor is required to pay the VAT charged to revenue.
The sucontractor is required to charge VAT to the customer.

Why should the customer even need to know about VAT, if I buy a car I don't need to know!

If the subcontractor takes an amount in any legal form (e.g. cash) and it's a final amount where they are not disputing the amount paid over, then the homeowner is in the clear in my view.

Making the customer responsible for the tax affairs of the contractor, is not something that has been legislated for based on my reading of the material.

There may be a case to argue conspiracy to defraud (I think it's called that) but revenue would have challenges proving that.

mickdw

sas wrote: »

Disclaimer: I'm not trying to support the concept of the black economy here...

I don't even see why the homeowner needs to produce\retain invoices.

The subcontractor is required to pay the VAT charged to revenue.
The sucontractor is required to charge VAT to the customer.

Why should the customer even need to know about VAT, if I buy a car I don't need to know!

If the subcontractor takes an amount in any legal form (e.g. cash) and it's a final amount where they are not disputing the amount paid over, then the homeowner is in the clear in my view.

Making the customer responsible for the tax affairs of the contractor, is not something that has been legislated for based on my reading of the material.

There may be a case to argue conspiracy to defraud (I think it's called that) but revenue would have challenges proving that.

I agree with you but it would be wise to retain records of payments.
Back in 2006, the welfare inspectors marched into my self build (without ppe I might add) and introduced themselves as being from revenue and welfare. I was doing a bit of timber work myself. They asked who owned the house, my occupation and who did blockwork and roofing.
Nothing of interest for them as I had registered trades but I can see how they would ask alot more questions nowadays so from homeowners point of view, I would be paying by cheque anyway.
As you say, what the tradesman does after that, is his business.

sydthebeat

When the sub contractor is c2 registered then theres no problem at all. The whole issue here revolves around cases where the sub contractor is NOT C2 registered.

I though that was obvious from the first link I posted?

I'm in no way am expert on this, I'm just giving my interpretation of how I read it.
I'm coming from a cynical view that revenue will do whatever they can to stop black market practises

muffler

Solution: Change name by deed poll to Charles J Haughey. No more tax problems :pac:

martinn123

sydthebeat wrote: »

When the sub contractor is c2 registered then theres no problem at all. The whole issue here revolves around cases where the sub contractor is NOT C2 registered.

I though that was obvious from the first link I posted?

I'm in no way am expert on this, I'm just giving my interpretation of how I read it.
I'm coming from a cynical view that revenue will do whatever they can to stop black market practises

C2, etc are irrelevant, in a contract between a homeowner/ self-builder and a Contractor.

The home owner cannot claim back VAT, and so the only ''Revenue'' related item is VAT charged at the correct rate, on the job as a whole.

In answer to the OP, the Revenue may write to a home builder to insure he/she paid VAT on purchases, or Contracted Projects.
It's to stamp out the Black economy jobbers, and/or guy's who buy goods in the North using a dodgy VAT no.

Villain

sydthebeat wrote: »

When the sub contractor is c2 registered then theres no problem at all. The whole issue here revolves around cases where the sub contractor is NOT C2 registered.

I though that was obvious from the first link I posted?

I'm in no way am expert on this, I'm just giving my interpretation of how I read it.
I'm coming from a cynical view that revenue will do whatever they can to stop black market practises

So if I pay someone to cut my grass and hedges etc and they aren't C2 registered RCT then applies to me?

Because there is zero difference between that and a self build.

martinn123

Villain wrote: »

So if I pay someone to cut my grass and hedges etc and they aren't C2 registered RCT then applies to me?

Because there is zero difference between that and a self build.

No, the guy cutting your grass, charges you for Labour, materials, if used, and the correct rate of VAT, if he is registered for VAT.
C2 is irrelevant.
Same with a self-build

mickdw

martinn123 wrote: »

In answer to the OP, the Revenue may write to a home builder to insure he/she paid VAT on purchases, or Contracted Projects.
It's to stamp out the Black economy jobbers, and/or guy's who buy goods in the North using a dodgy VAT no.

And what happens if home builder writes back with invoices for materials from various suppliers and then says they did the labour themselves? Although they had really paid cash?

martinn123

mickdw wrote: »

And what happens if home builder writes back with invoices for materials from various suppliers and then says they did the labour themselves? Although they had really paid cash?

Well if they say they did say the Electrical, Plumbing labour themselves, I suppose Revenue might ask where/how they qualified/studied as an electrician, or check that they posess the necessary tools to carry out the work.
If the home owner actually works as an Fork Lift Driver he may have a problem.

Villain

There is also an assumption that all labour is paid for, what about friends and family that volunteer?