Vat registration for reverse charge

coco2110

Hi

Hoping someone can answer my query.

If a flat rate farmer wants to buy a machine from the north in order to not pay out the vat they need to be vat registered in order to reverse charge it.

My query is is it possible to register, buy the machine then deregister? As there will be no loss to Revenue there will be nothing to pay back - am I correct in thinking this?

Thank you

Lockedout2

They can register but as they are only registering for the purchase of the tractor they can't claim an input credit!!!

So they will pay Irish VAT @23%.

coco2110

Lockedout2 wrote: »

They can register but as they are only registering for the purchase of the tractor they can't claim an input credit!!!

So they will pay Irish VAT @23%.

Hi Lockedout

Thanks for the reply but don't think you understood what I was asking.

U.K. vat would be charged @ 20% if unregistered for vat.

under Intra EU rules this would be reverse charged if they were vat registered. Thus the net effect is nil.

Lockedout2

If the farmer is only registering for the acquisition of the machine then he can't take a credit for the VAT under the reverse charge.

If he is registering and will continue to be registered for VAT, foregoing the flat rate addition then he is entitled to get the credit.

In other words he can't just claim the VAT back on the machine and deregister.

coco2110

Lockedout2 wrote: »

If the farmer is only registering for the acquisition of the machine then he can't take a credit for the VAT under the reverse charge.

If he is registering and will continue to be registered for VAT, foregoing the flat rate addition then he is entitled to get the credit.

In other words he can't just claim the VAT back on the machine and deregister.

Would there be a clawback if he did?

Lockedout2

coco2110 wrote: »

Would there be a clawback if he did?

Yes otherwise everyone would do it.