Should I have registered for VAT

campo

So a little under 12 months ago I applied for the BTWEA and was granted it, so off I went and set up as a sole trader created a website where I started selling my goods.

At the time when setting up as a sole trader I was advised there was no need to register for VAT now here we are 12 months later and my site has taken in just over 100k worth of sales ( of course that is not profit as most of that went out in getting new stock, postage & packaging some advertising etc )

So now comes the time when I have to do my accounts for Mr.Tax man and the accountant says that with sales of 100k I should have registered for VAT :eek:

So my question is if I now register for VAT what would I be liable for , like I know 100k sounds a lot but there was not much profit in that as I was only starting out and was paying too much for stock and postage at one stage and only in last couple of months am I saying any kid of decent return....

HELP

jimmii

That's not good you should definitely have registered at the start or at least when it became obvious you were going to reach the threshold. Pretty sure you are going to have to pay that VAT now. When that person told you not to register how much did you guestimate your turnover was going to be? For retail the threshold is very low.

Contact Revenue they are very helpful if it is a case where you have to pay that VAT now then they might work out a payment plan for you as the guts of €19k is pretty tricky to come up with for a new business!

campo

jimmii wrote: »

That's not good. Pretty sure you are going to have to pay that VAT now. When that person told you not to register how much did you guestimate your turnover was going to be? For retail the threshold is very.

Contact Revenue they are very helpful if it is a case where you have to pay that VAT now then they might work out a payment plan for you as the guts of €19k is pretty tricky to come up with for a new business!

I guessed at the time it would be around 35k but even that was being optimistic in truth

Miguel_Sanchez

jimmii wrote: »

That's not good. Pretty sure you are going to have to pay that VAT now. When that person told you not to register how much did you guestimate your turnover was going to be? For retail the threshold is very.

Would Revenue expect him to pay the VAT if he wasn't charging VAT?

When I started out as a sole trader I did not register for VAT as I was sure in my first year I would not break the 37.5k limit. However I did. I simply paid the taxes due for the year, registered for VAT and started paying it from then on.

Revenue never contacted me about it. Mind you I think I only broke 40k or thereabouts so it wasn't a huge overshot but you'll probably be ok as you did not foresee that your business would take in the money it did.

jimmii

campo wrote: »

I guessed at the time it would be around 35k but even that was being optimistic in truth

Did you know what the thresholds were? I hope you weren't importing products and paying foreign VAT on them!

campo

Miguel_Sanchez wrote: »

Would Revenue expect him to pay the VAT if he wasn't charging VAT?

When I started out as a sole trader I did not register for VAT as I was sure in my first year I would not break the 37.5k limit. However I did. I simply paid the taxes due for the year, registered for VAT and started paying it from then on.

Revenue never contacted me about it. Mind you I think I only broke 40k or thereabouts so it wasn't a huge overshot but you'll probably be ok as you did not foresee that your business would take in the money it did.

I wasn't charging VAT either if that helps

jimmii

Miguel_Sanchez wrote: »

Would Revenue expect him to pay the VAT if he wasn't charging VAT?

When I started out as a sole trader I did not register for VAT as I was sure in my first year I would not break the 37.5k limit. However I did. I simply paid the taxes due for the year, registered for VAT and started paying it from then on.

Revenue never contacted me about it. Mind you I think I only broke 40k or thereabouts so it wasn't a huge overshot but you'll probably be ok as you did not foresee that your business would take in the money it did.

Think you might have got lucky there from the registration requirements it appears that any 12 month period that hits the threshold VAT is meant yo be collected. Whether you have added it into your pricing is irrelevant when someone pays you part of that is for the Revenue.

jimmii

campo wrote: »

I wasn't charging VAT either if that helps

Ring them and tell then what's happened see what they say nothing anyone else says really matters.

campo

jimmii wrote: »

Did you know what the thresholds were? I hope you weren't importing products and paying foreign VAT on them!

Thinking back yes I now remember being told about threshold but I said to myself ya right like I would make that but that soon with out of my head so my bad.

Regards importing a paying foreign VAT what does that mean like if I imported goods from China I paid customs duty etc but that was only for 1st couple of months but I then got a UK Supplier who was able to supply and distribute and I mainly sell to UK

dbran

You need to talk to your accountant about this really as there is not enough information for anyone to say how much VAT you owe or whether you should register at all.

What sort of goods were sold to whom and where? If you should have been charging VAT and did not do so then unless you can go back to your customers and get them to pay the extra amount then you are going to have to "eat" this cost. Did you take VAT into account when you did your original costings? If not this could be a big mistake.

dbran

Miguel_Sanchez

jimmii wrote: »

Think you might have got lucky there from the registration requirements it appears that any 12 month period that hits the threshold VAT is meant yo be collected. Whether you have added it into your pricing is irrelevant when someone pays you part of that is for the Revenue.

Interesting.

The advice I got from accountants at the time was along the lines of "you're not likely to break the limit, if you do simply register then and charge it from then next year."

It took so long for revenue to process my VAT registration that even if I had registered the moment i broke the limit I still wouldn't have been up and running with a VAT number until the next tax year.

Obviously I was only a small amount over the limit so my defence that I didn't believe I was going to break it is more believable.

Mine is a service only business though - not sure if that makes a difference in the eyes of Revenue.

campo

dbran wrote: »

You need to talk to your accountant about this really as there is not enough information for anyone to say how much VAT you owe or whether you should register at all.

What sort of goods were sold to whom and where? If you should have been charging VAT and did not do so then unless you can go back to your customers and get them to pay the extra amount then you are going to have to "eat" this cost. Did you take VAT into account when you did your original costings? If not this could be a big mistake.

dbran

What sort of goods were sold to whom and where? Electrical goods and gadgets to UK customers

Did not charge for VAT and didn't take it into account as I never for one moment think that I would go above threshold and when I did go above it I never remembered threshold, was it stupid yes but I never worked for myself before it was all very new to me

Anyway I am off to vomit thanks for all the replies

jimmii

Miguel_Sanchez wrote: »

Interesting.

The advice I got from accountants at the time was along the lines of "you're not likely to break the limit, if you do simply register then and charge it from then next year."

It took so long for revenue to process my VAT registration that even if I had registered the moment i broke the limit I still wouldn't have been up and running with a VAT number until the next tax year.

Obviously I was only a small amount over the limit so my defence that I didn't believe I was going to break it is more believable.

Mine is a service only business though - not sure if that makes a difference in the eyes of Revenue.

I think you have to be wary of what accountants say on things like this they should obviously be well versed in the matter but at the end of the day all that matters is what Revenue says and "but my accountant said x" doesn't get you anywhere with them!

Miguel_Sanchez

jimmii wrote: »

I think you have to be wary of what accountants say on things like this they should obviously be well versed in the matter but at the end of the day all that matters is what Revenue says and "but my accountant said x" doesn't get you anywhere with them!

Looks like it.

The "likely to exceed" was the bit that got me. My pay as an employee in the same business was lower than the VAT limit so I believed that I wasn't likely to exceed it at all.

jimmii

Miguel_Sanchez wrote: »

Looks like it.

The "likely to exceed" was the bit that got me. My pay as an employee in the same business was lower than the VAT limit so I believed that I wasn't likely to exceed it at all.

Yeh for services its relatively higher at 37.5k or whatever it is seeing as for some that could be almost entirely profit whereas anyone selling goods is making very little if anything from 75k. From my experience with Revenue when you're new they are pretty reasonable I have messed up VAT returns twice in the past and both times they were super helpful and fixed it all for me!

Scarab80

campo wrote: »

What sort of goods were sold to whom and where? Electrical goods and gadgets to UK customers

Did not charge for VAT and didn't take it into account as I never for one moment think that I would go above threshold and when I did go above it I never remembered threshold, was it stupid yes but I never worked for myself before it was all very new to me

Anyway I am off to vomit thanks for all the replies

Not to worry you any further but you probably need to register for VAT in the UK as well under distance selling regulations, contact an accountant as your VAT may be payable in the UK rather than Ireland if you have gone over the distance selling threshold (GBP£70K)

http://www.revenue.ie/en/tax/vat/leaflets/distance-sales-eu.html

dbran

campo wrote: »

What sort of goods were sold to whom and where? Electrical goods and gadgets to UK customers

Did not charge for VAT and didn't take it into account as I never for one moment think that I would go above threshold and when I did go above it I never remembered threshold, was it stupid yes but I never worked for myself before it was all very new to me

Anyway I am off to vomit thanks for all the replies

If they are non business UK customers, then it is UK VAT that you need to register for under distance selling rules as previously mentioned.

If they are UK business customers and they are VAT registered (and presumably you are responsible for the delivery goods outside of Ireland) then they are Inter-Eu Supplies and there is no Irish or UK VAT once you get the vat number of the customer and put it on the invoice.

Go see your accountant and get him to sort it out.

dbran

jimmii

Scarab80 wrote: »

Not to worry you any further but you probably need to register for VAT in the UK as well under distance selling regulations, contact an accountant as your VAT may be payable in the UK rather than Ireland if you have gone over the distance selling threshold (GBP£70K)

http://www.revenue.ie/en/tax/vat/leaflets/distance-sales-eu.html

Good point definitely a lot that needs to be looked into further here for OP.

campo

dbran wrote: »

If they are non business UK customers, then it is UK VAT that you need to register for under distance selling rules as previously mentioned.

If they are UK business customers and they are VAT registered (and presumably you are responsible for the delivery goods outside of Ireland) then they are Inter-Eu Supplies and there is no Irish or UK VAT once you get the vat number of the customer and put it on the invoice.

Go see your accountant and get him to sort it out.

dbran

Yep non business customers just normal joes going to a site to make a purchase

I foolishly believed that I would only pay VAT on any profit I made over 37k
Like I didn't start out with a load of stock and sold that for 100k anything I made I re-invested into the business to get more stock or upgrade site etc

Profit wise this year I probably made enough for a trip to the cinema

drunkmonkey

Do not ring the revenue under any circumstances , talk to an accountant let them do that if it's necessary.

campo

Might be a silly questions but if my sales to Ireland fell under the threshold of 70k euro and if my sales to UK fell under £70k GBP would I still be liable for VAT as I sell to both areas using a drop shipping service and at a guess I would have less the 70k sales from each state but if they were combined I would go above the threshold

dbran

campo wrote: »

What sort of goods were sold to whom and where? Electrical goods and gadgets to UK customers

Did not charge for VAT and didn't take it into account as I never for one moment think that I would go above threshold and when I did go above it I never remembered threshold, was it stupid yes but I never worked for myself before it was all very new to me

Anyway I am off to vomit thanks for all the replies

You are changing your story? You originally said (or seemed to suggest) that they were all UK sales. Now you are saying its a percentage between UK and Ireland?

Its time to go to a professional.

Thread closed.

dbran