Claiming VAT refund on pre-registration costs?

ectoraige

Hi, I hope this is the correct forum for this.

Some friends set up a business recently and mentioned having trouble registering for VAT. They registered their company in October and then applied for VAT. They didn't send the form themselves, their accountant was to do it.

However, they are still waiting for the registration, and their accountant has told them there's a backlog in Revenue. When I heard this I smelt BS, and told them there's no way it should take that long. They chased it up with the accountant and this time were informed that the delay is because one of the directors is from Northern Ireland. Now, of course, the company is registered in Ireland so this really sounds like they are getting the run-around from the accountant.

The problem they have now is that they didn't anticipate having to spend all the VAT on their initial start-up costs which have been relatively significant. Even if the registration was made in November, and somehow delayed, am I right in thinking they can't claim a refund retrospectively, and will have to instead suck it up against their income? I think this leaves them in a pretty bad cash-flow position.

Personally, I think it's time they change accountant, is there any supervisory body that things like this can be reported to as if it's a case that the application was never sent in, that accountant could easily be contributing to the failure of their business?

Citizenpain

What date was put on the TR1 under this field ? "State the date from which you require to register"

Legend100

ectoraige wrote: »

They chased it up with the accountant and this time were informed that the delay is because one of the directors is from Northern Ireland. Now, of course, the company is registered in Ireland so this really sounds like they are getting the run-around from the accountant.

Just to let you know that I have come accross this numerous times and is a pain in the a*se. It arises because of the fact the director normally will not have a pps number so it delays everything. It needs further clearance I think on the Revenue end to approve

But as mentioned, if the effective date of the Registration was on the form before the purchases, your friend should be ok as the Revenue will register the business from then

ectoraige

Legend100 wrote: »

Just to let you know that I have come accross this numerous times and is a pain in the a*se. It arises because of the fact the director normally will not have a pps number so it delays everything. It needs further clearance I think on the Revenue end to approve

But as mentioned, if the effective date of the Registration was on the form before the purchases, your friend should be ok as the Revenue will register the business from then

That's somewhat reassuring, although it doesn't make sense. I can understand such a delay for the company registration, but surely it's the company itself applying? Would they not have had to clear up the PPS part with the CRO first to incorporate in the first place?

They did have a Nov date down for the start date do they'll be happy to hear that anyway.

Legend100

ectoraige wrote: »

That's somewhat reassuring, although it doesn't make sense. I can understand such a delay for the company registration, but surely it's the company itself applying? Would they not have had to clear up the PPS part with the CRO first to incorporate in the first place?

They did have a Nov date down for the start date do they'll be happy to hear that anyway.

It's because of ownership - in a very large co with many shareholders it would not be an issue, but in small companies (close companies for tax) the Revenue needs to know more details about the directors.....the usual red tape!

Mr. Incognito

Pre VAT registration costs are not allowable

So if they registered in Nov this covers the VAT period Nov- Dec and they will not be able to reclaim the VAT for expenses in Sept-Oct.

Their accountant should have advised them of this. It is why you are better off sending in the TR1 immediately prior to incurring expenses

ectoraige

Mr. Incognito wrote: »

Pre VAT registration costs are not allowable

So if they registered in Nov this covers the VAT period Nov- Dec and they will not be able to reclaim the VAT for expenses in Sept-Oct.

Their accountant should have advised them of this. It is why you are better off sending in the TR1 immediately prior to incurring expenses

That's exactly what they did, they'd filled out the paperwork in October and put Nov 1st down as the start date for registration. They then started fitting out in November so as to be able to reclaim the VAT on those expenses.

However it's now four months later and they still don't have the VAT number so they are reaching the point where they could really do with the refund to ease their cash flow.

nompere

ectoraige wrote: »

That's exactly what they did, they'd filled out the paperwork in October and put Nov 1st down as the start date for registration. They then started fitting out in November so as to be able to reclaim the VAT on those expenses.

However it's now four months later and they still don't have the VAT number so they are reaching the point where they could really do with the refund to ease their cash flow.

As was pointed out above, Revenue will not register a company for any taxes without PPS numbers for all directors. PPS numbers are not required for CRO registration. Nevertheless, if the registration form was filed in November the registration will be backdated to then - but the number won't issue until all the PPS numbers are given to Revenue.