Vat question

frogstar

Hi

My brother has just recently set up a small company selling car parts

He will not meet the threshold but most of his clients are vat registered so he has registered.

Can I confirm if the following is correct?

1) He will be paying the revenue the VAT on the invoicees he issues.
2) He can claim back the VAT that he has paid on the purchase for parts.
3) He can claim back the vat on his diesel ( lots of driving!)
4) I also read if his liability lis less than 3000 pa that he will only have to do returns every six months. Is this correct?
5) What else can he claim back vat on? Is it everything that involves the business apart from food / drink / accommodation etc...

As this is all new to him and it's going to be slow burner, is it easy enough for him to do his returns himself?

Sorry if this has been asked many times, I did a search but wasn't getting the answers I want and I read the revenue document as well,

Many thanks!

pconnolly79

That seems spot on frogster
The first few VAT returns might be on a bi-monthly or quarterly basis until the Revenue see that his liability is so low that they will stagger his returns out to half yearly.
You can claim a VAT refund on anything business related.
Just be careful on the whole Diesel thing, he isn't entitled to a refund on the personal use of Diesel or claim it through his accounts as an expense.
Just put through what is business use only.

frogstar

Perfect thank you.

So the revenue decide if it's to be returned every two months or six?

Re the diesel, should he keep a log as he's racking up about 150e a week in diesel. I'd imagine most is business as it's in his van that he doesnt really use for personal use.

I think he's angling at getting me to do the returns for him

pconnolly79

I've never asked the Revenue to stagger the return out more, I usually get a letter from them stating that the returns are now being filed say over a quarterly basis.

If you can state that the Van is only used for business purposes then you can claim a full VAT refund on its diesel and include the full net cost in the accounts.
I would usually add back a small percentage for personal use.
There has to be times you drive down to the shops to do the shopping etc.

Did he purchase the van for the business, there is a possible vat refund on this

frogstar

Thanks again, probably better to do it every two months at the start to get a routine.

He has been given a lend of the van for the first year but may buy one if things go well

How do you manage the income tax side of things that are paid annually? He's afraid to take any money out of the business incase he has to pay tax, doesn't want to be left with a liability not accounted for.

He's still on SW but there's some programme that's allowing him to start up his own business for two years while still claiming as he was out of work for a number of years.

pconnolly79

You might need an accountant for that
It is not as straight forward as doing a few VAT returns.
Not sure if I'm allowed to post it here, but I know this guy personally and he is good and very affordable connollyconsulting<dot>ie
I think for €70 a month he does everything including VAT or even cheaper for a one off tax return