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Writting off non-VAT item

  • 03-09-2013 1:00pm
    #1
    sketchpad
    Registered Users, Registered Users 2 Posts: 185 ✭✭


    I'm not registered for VAT as I have only set up business in the last couple of months and will fall below the VAT threshold for this year.

    If I sell a product to another business that would normally be VAT deductable for them, eg. business cards, can they still write this off as a business expense even though they havent paid VAT on it?


Comments

  • #2
    nompere
    Registered Users, Registered Users 2 Posts: 1,678 ✭✭✭nompere


    It's still an expense for them, and properly deductible.

    If you're selling B2B then you are probably better off registering for VAT as the net cost to your customers is the same, but you will get back the VAT that you are being charged. You can register voluntarily even if you are below the threshold.


  • #3
    stef1234
    Registered Users, Registered Users 2 Posts: 3 ✭stef1234


    Hi I am in a similar situation to sketchpad as I too will fall below the VAT threshold so I am not VAT registered and do not charge VAT on my products. I have however had a client ask me for "material invoices so we can claim the vat back as no vat on your invoices". I am assuming that I do not have to furnish them with this as I have paid the vat on the materials so if anyone should claim the vat it should be me ( if I was VAT registered) correct? Are they trying to do something shady as regards claiming Vat back? would appreciate any feedback as I don't want to start my business off by getting dragged into something shady. thanks


  • #4
    nompere
    Registered Users, Registered Users 2 Posts: 1,678 ✭✭✭nompere


    They probably don't expect that you're not registered. Tell them - and say that is why you can't supply a VAT invoice.


  • #5
    stef1234
    Registered Users, Registered Users 2 Posts: 3 ✭stef1234


    I explained to them about not being Vat registered and therefore not charging VAT. I also said that the material invoices were costs incurred by my company and as such the invoices would remain with my company as materials expenses. They just said 'OK' nothing more was said. Thanks for the advice I appreciate you taking the time to reply.


  • #6
    Marcusm
    Registered Users, Registered Users 2 Posts: 10,633 ✭✭✭✭Marcusm


    As you are not recovering the VAT on your materials, either your profits will be lower or your costs higher than your competitors (for whom the input VAT is not a cost). Without knowing your margins, it's hard to know whether this will make your business unviable. You need to consider whether the input VAT you're not recovering is significantly higher than the cost (accountants etc) of recovering it and whether the balance of business v consumer sales makes voluntary registration a priority.


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