TR1 VAT reg. Q.36 Translation

knickerbocker

Hi All,
Hope somebody might be able to translate Q.36 on the TR1 for for VAT registration, it reads as follows:

36. Are you applying for the moneys received basis of accounting for goods and services?

As a non-accountant/Tax person I don't understand the meaning of this!

If it helps, the business is manufacturing, selling domestically and both importing and exporting.

Many thanks,
CK.

Alan Shore

Normally businesses pay VAT when the raise an invoice. Under the money received basis the business only has to pay the VAT when they receive payment for the invoice.

http://www.revenue.ie/en/tax/vat/guide/received-basis.html

knickerbocker

Thanks for that Alan, that was my thought on it.... but then I wondered why one would pay a tax on money they haven't yet received ---- but I guess there must be a reason there somewhere.

Legend100

knickerbocker wrote: »

Thanks for that Alan, that was my thought on it.... but then I wondered why one would pay a tax on money they haven't yet received ---- but I guess there must be a reason there somewhere.

Larger companies cannot opt for the moneys received basis so they do have a cashflow disadvantage for VAT. The moneys received basis was introduced to help small businesses manage their cashflow

barneystinson

knickerbocker wrote: »

Thanks for that Alan, that was my thought on it.... but then I wondered why one would pay a tax on money they haven't yet received ---- but I guess there must be a reason there somewhere.

Don't forget that the VAT on inputs can be reclaimed on the invoice basis as well - meaning you can receive a refund for VAT you haven't actually paid yet, so it goes both ways.