Closing a business & de-registering for VAT

Codi

Hi,

I saw similar threads, but couldn’t find answer to my question.
I opened a business in 2011 and would like to close it in upcoming days. I was also registered for VAT. I was ordering products from another member state of EU with 0% VAT rate, therefore accounting for VAT while filing VAT3 form and claiming it back at the same time. Now I would be closing my business and my question is:

Will I have VAT liability for unsold stock, that I will hold on the day of cessation of my business?

Thanks for all anwers.

lakill Farm

you need to talk to your accountant / agent

dbran

Yes.

They have not been used for business purposes as it has closed

Regards

dbran

smeharg

It will depend on whether or not you elected to register for VAT, ie your turnover was below the threshold but you decided to register anyway.

If that's the case you need to provide Revenue with details of VAT recliamed, VAT charged and any refunds you received for last 3 years. Basically if you reclaimed more than you charged you could be liable for the difference.

Otherwise there shouldn't be any clawback as technically you are no longer an accountable person for VAT as your turnover has fallen below the threshold.

Codi

smeharg wrote: »

It will depend on whether or not you elected to register for VAT, ie your turnover was below the threshold but you decided to register anyway.

If that's the case you need to provide Revenue with details of VAT recliamed, VAT charged and any refunds you received for last 3 years. Basically if you reclaimed more than you charged you could be liable for the difference.

Otherwise there shouldn't be any clawback as technically you are no longer an accountable person for VAT as your turnover has fallen below the threshold.

My income was below the threshold since the beginning, however I was obliged to register for VAT because of intra-community acquisitions.

Alan Shore

Stock and equipment held on the date of cessation are surely subject to the self supply provisions.

Perhaps the stock has no resale value? What are you going to do with it.

smeharg

Apparently it's not a self-supply. If the trade ceases the trader ceases to be an accountable person for VAT as turnover will have fallen below the registration threshold. If you consider the process logically the cancellation of VAT registration must occur before cessation of the trade as VAT registration can only exist in respect of a business.

This is from Revenue's notes for guidance to the VAT Consolidation Act, 2010 (page 20)

This section provides that Revenue may cancel a VAT registration where the trader is no longer an accountable person. The implication of Revenue cancelling a VAT registration, as opposed to the trader cancelling an election to register, is that the trader does not have to repay any excess tax refunded to him or her during the period of the registration. The section applies where a person is below the registration threshold and is not an election case.

smeharg

Codi wrote: »

My income was below the threshold since the beginning, however I was obliged to register for VAT because of intra-community acquisitions.

It's still an obligation to register, not an election to register. You were obliged to register as your intra EU acquisitions exceeded the relevant threshold. The consequence of that registration was that you were obliged to charge VAT on your sales and entitled to reclaim VAT on your purchases.