Cannot pay my vat liability

Bumbler

Hi there,

I made a mess of my vat returns and noted I had a vat liability. Have an excellent history with Revenue so they have been very helpful. Unfortunately I have not been paid on numerous jobs and I have had to return goods that I purchased hence having the vat bill.

However I do not have the 25% down payment that Revenue require for me to pay off the debt. Is there anything I can do. I do not have access to credit. I owe approx 16k

srsly78

What does your accountant say? If you have returned the goods then there should be no liability?

dbran

Hi

Go and see a qualified accountant or tax advisor.

First you have to figure out how much tax you actually owe before you start to write cheques to revenue for €16k (plus interest).

Dbran

ebbsy

Are you on a cash receipts basis ? That would help.

As per the advice above get an accountant.

Bumbler

Thanks all for feedback. Have made an appointment with an accountant early new year. Revenue have refused to accept stage payments unless a 25% down payment is made. I definitely owe the 16k. I don't have machinery or the likes so I wonder should I just agree to a judgement against me to save legal costs etc.?


@ srsly78, hi, yes goods were returned and a credit note was issued. Problem is I already had offset said purchases against my sales and now a liability has occurred.

barneystinson

Bumbler wrote: »

Thanks all for feedback. Have made an appointment with an accountant early new year. Revenue have refused to accept stage payments unless a 25% down payment is made. I definitely owe the 16k. I don't have machinery or the likes so I wonder should I just agree to a judgement against me to save legal costs etc.?


@ srsly78, hi, yes goods were returned and a credit note was issued. Problem is I already had offset said purchases against my sales and now a liability has occurred.

When you say you haven't been paid on these various jobs, are you likely to be paid in the future, or is it bad debt? If it's genuine bad debt that can / should be written off then you may not be liable for the full liability, subject to demonstrating that it is reasonable to write off the debt as bad debt... http://www.revenue.ie/en/tax/vat/leaflets/bad-debts-relief.pdf

ebbsy

Make sure that the first thing your accountant does is ring the revenue and let them know that he is dealing with it. This will stop them from pushing the red button.

As per the very good advice above review your sales invoices and establish are they good for payment or not. This could save you a lot of money.

If you can get it down to around 6k an informal arrangement is possible. They will ask for 25% though.

Bumbler

Thanks a million all.

Are Revenue likely to go before the Courts with this if I am unable to get my liability down? I am contemplating not paying my mortgage so I can try and pay it off. Am I digging myself a deeper hole?

Alan Shore

As previous posters have asked:

- Are you on a cash receipts basis for VAT?
- does the non payment by customers result in a claim of bad debt relief?

If your business is not making a profit then non paying your mortgage is not the answer.

lakill Farm

maybe you should be issuing proforma invoices until the items are paid for if your not accounting for vat using cash basis

barneystinson

lakill Farm wrote: »

maybe you should be issuing proforma invoices until the items are paid for if your not accounting for vat using cash basis

That won't cut it with Revenue though, as the tax point is dictated by when the supply takes place?

CIARAN_BOYLE

barneystinson wrote: »

That won't cut it with Revenue though, as the tax point is dictated by when the supply takes place?

You can opt to (and request premission to) account for VAT on a cash receipts basis

Details here

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

barneystinson

CIARAN_BOYLE wrote: »

You can opt to (and request premission to) account for VAT on a cash receipts basis

Details here

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

If you read the post I was quoting, it refers to a trader who isn't on cash receipts basis.