VAT and the Services level Threshold

Calahonda52

The revenue site says that if the threshold is not expected to be breached in a 12 month period then there is no requirement to register for VAT.

Neighbour has a limited company and does landscaping and garden consultancy during the summer so the threshold is never breached.
He does some corporate work and gets paid plus VAT.

Is he liable to pay the VAT to Revenue despite not being registered or can he just trouser it?
Thanks

Rabbo

Calahonda52 wrote: »

The revenue site says that if the threshold is not expected to be breached in a 12 month period then there is no requirement to register for VAT.

Neighbour has a limited company and does landscaping and garden consultancy during the summer so the threshold is never breached.
He does some corporate work and gets paid plus VAT.

Is he liable to pay the VAT to Revenue despite not being registered or can he just trouser it?
Thanks

If he is charging VAT to companies, they would expect to receive a VAT invoice showing his VAT number so that they can claim the VAT back from Revenue. It's unlikely that he is charging them VAT if he is unable to provide them a VAT invoice with VAT registration number

Calahonda52

Thanks, he is putting his tax registration number on the invoices and is charging them VAT.

Rabbo

Well that's tax fraud. His clients are likely claiming that "VAT" that he is pocketing back from Revenue

Calahonda52

Rabbo wrote: »

Well that's tax fraud. His clients are likely claiming that "VAT" that he is pocketing back from Revenue

Thanks for this.
Its not quite tax fraud yet as I said in the first post
"Is he liable to pay the VAT to Revenue despite not being registered or can he just trouser it?"
I called him last night and the corporate work is new.

You have now established that it should be paid back so the next question is how can he do that without registering for VAT and have all the hassle of VAT 3 returns even though he won't hit the threshold.

marizpan

If he is not vat registered then he should not be charging vat at all. You can't pick and choose when to apply vat.
Revenue will see that as vat fraud.

dbran

Hi

It is fraud.

Revenue would look on this as "unjust enrichment" and would certainly throw the kitchen sink at your neighbour because they are effectively pretending they are VAT registered when they are not and presumably then keeping the money. Also the customer is probably claiming back the credit on their own VAT return. So the revenue are out of pocket twice.

They need to register for VAT and pay over the VAT charged to revenue. They may or may not be able to back date the registration depending on whether or not the vat threshold is exceeded or not.

Best of luck with this.

dbran

Calahonda52

Thanks dbran
Hadn't heard of unjust enrichment, only uranium enrichment, which I suppose some cases is also unjust

He is registered for ROS so will pay the VAT collected and not do any more corporate work as he does want the bimonthly hassle

Thanks again, case closed

Loughc

Calahonda52 wrote: »

Thanks dbran
Hadn't heard of unjust enrichment, only uranium enrichment, which I suppose some cases is also unjust

He is registered for ROS so will pay the VAT collected and not do any more corporate work as he does want the bimonthly hassle

Thanks again, case closed

Registered for ROS doesn't mean much, he needs to be registered for VAT in order to pay/claim VAT.

Mr. Incognito

Just to be clear.

You can register for VAT if you are trading no matter what your turnover is.

You are only OBLIGED to register if you breach the thresholds.

If he is issuing a VAT invoice with this VAT number on it and charging VAT he could very well be accounting for this and sending it to Revenue and reclaiming his own VAT no matter what his turnover is.

If you have any suspicions there is a free number on Revnue.ie to report suspicious behaviour.

Calahonda52

Loughc wrote: »

Registered for ROS doesn't mean much, he needs to be registered for VAT in order to pay/claim VAT.

Claim yes, pay no

Mr. Incognito wrote: »

Just to be clear.

You can register for VAT if you are trading no matter what your turnover is.

You are only OBLIGED to register if you breach the thresholds.

If he is issuing a VAT invoice with this VAT number on it and charging VAT he could very well be accounting for this and sending it to Revenue and reclaiming his own VAT no matter what his turnover is.

If you have any suspicions there is a free number on Revnue.ie to report suspicious behaviour.

This is what he will do, we looked at his ROS screen and there is a facility to pay VAT.
Thanks for all the input

Loughc

Sorry are you saying he can pay VAT on ROS while being Unregistered for VAT?

Calahonda52

Loughc wrote: »

Sorry are you saying he can pay VAT on ROS while being Unregistered for VAT?

Yes, see attached, he was registered for VAT many years ago, maybe this matters, however he can't re-reg for VAT on ROS

Loughc

Calahonda52 wrote: »

Yes, see attached, he was registered for VAT many years ago, maybe this matters, however he can't re-reg for VAT on ROS

Yes of course that matters!!!

Let's just clear things up here, you CANNOT submit VAT returns on ROS unless you are registered for VAT, your friend is indeed still registered for VAT therefore is correctly adding VAT onto his invoices, he just needs to make sure he is submitting the returns and remembering that by charging VAT, the VAT he charges needs to be paid over to the Revenue Commissioners.

Loughc

If your neighbor does not want to be paying VAT and is under the threshold, he needs to deregister for VAT, credit note all invoices he issued with VAT charged and re-issue them with 0% VAT charged.

If he is continues to charge VAT on the invoices, he needs to ensure to quote his VAT registration number on the invoice so the person paying the invoice can claim the VAT back. (If they themselves are registered)