sole trader vat registration

spacekiwi

Hi, am employed full time, but at near enoughmin wage.
Was thinking of starting a small landscaping, mowing business for wknds /hols/free time etc.
Someone said tgat you dont have to register for vat unless business earnings are above a certain amount per year.
Anyone kniw if thats correct? Or what amount has to be under?
Thanks

spacekiwi

Sorry for spelling errors, phone keypad very small.

phormium

€37,500 turnover limit for the provision of services.

Calahonda52

phormium wrote: »

€37,500 turnover limit for the provision of services.

As shown here:
http://www.revenue.ie/en/tax/vat/guide/registration.html

That limit is before VAT

However an interesting question to be answered is how the VAT element in the services provided before the 37,500 limit is treated.

My opinion is that the VAT still has to be paid, otherwise prices go up by 23%/13.5% once the threshold is reached, not a good thing if your customer base is non VAT registered.
Further more, if not registered, can VAT on inputs be deducted..?

CIARAN_BOYLE

Calahonda52 wrote: »

As shown here:

Further more, if not registered, can VAT on inputs be deducted..?

No if not registered vat on inputs cannot be deducted.

Not sure what the other part of your post is about.

Calahonda52

CIARAN_BOYLE wrote: »

Not sure what the other part of your post is about.

Wont be the first or last time!!

Okay lets tease it out.
Scenario 1
I set up a consultancy service for giving energy advice to home owners.

I don't know how the business will go so decide NOT TO reg for VAT.

First customer I bill €100.00

So is this €100 net of VAT or is it €81.30 plus 23% VAT?

If it does include VAT, does it get paid over to Revenue.

Scenario 2
I set up a consultancy service for giving energy advice to home owners.

I know the business will go really well so decide TO reg for VAT as I will have a lot of eligible inputs.

First customer I bill €100.00

This €100 includes VAT so is €81.30 plus 23% VAT. No question

CIARAN_BOYLE

Calahonda52 wrote: »

Wont be the first or last time!!

Okay lets tease it out.
Scenario 1
I set up a consultancy service for giving energy advice to home owners.

I don't know how the business will go so decide NOT TO reg for VAT.

First customer I bill €100.00

So is this €100 net of VAT or is it €81.30 plus 23% VAT?

If it does include VAT, does it get paid over to Revenue.

If the company goes over and it has to backdate registration then it includes vat and it must be paid over to Revenue. However you don't necessarily have to backdate registration of the business to the beginning of trade if you go over the threshold.

Masala

Calahonda52 wrote: »

Wont be the first or last time!!

Okay lets tease it out.
Scenario 1
I set up a consultancy service for giving energy advice to home owners.

I don't know how the business will go so decide NOT TO reg for VAT.

First customer I bill €100.00

So is this €100 net of VAT or is it €81.30 plus 23% VAT?

If it does include VAT, does it get paid over to Revenue.

Scenario 2
I set up a consultancy service for giving energy advice to home owners.

I know the business will go really well so decide TO reg for VAT as I will have a lot of eligible inputs.

First customer I bill €100.00

This €100 includes VAT so is €81.30 plus 23% VAT. No question

........ you can't charge VAT unless u are VAT registered

In case 1 above... hiw can u charge vat with no vat no??

You be in right trouble with Revenue if Case 1 customer claims this Vat. And customer will look embassased when VAT man rejects his claim on this invoice

CIARAN_BOYLE

Masala wrote: »

........ you can't charge VAT unless u are VAT registered

In case 1 above... hiw can u charge vat with no vat no

If you should have been registered then you owe Revenue the vat that you should have charged.

There will be no VAT on the invoice so no one can claim a vat input credit.

Calahonda52

CIARAN_BOYLE wrote: »

If the company goes over and it has to backdate registration then it includes vat and it must be paid over to Revenue. However you don't necessarily have to backdate registration of the business to the beginning of trade if you go over the threshold.

Thanks.
So just to wrap this up, sticking with the two scenarios above, and assume, for simplicity, no VAT recoverable (*), then, registering for VAT will result in an 18.7% reduction in gross margin.

(*) no VAT recoverable is quite common these days with 100% web based advisory businesses: it came up in a chat between the rugby matches yesterday...
Thanks again.

Dublinboard

As far as I know it is difficult to back date a vat registration. Registration will apply from the first day of the taxable period.

There is a concession re back dating but quite rare

CIARAN_BOYLE wrote: »

If the company goes over and it has to backdate registration then it includes vat and it must be paid over to Revenue. However you don't necessarily have to backdate registration of the business to the beginning of trade if you go over the threshold.

CIARAN_BOYLE

Dublinboard wrote: »

As far as I know it is difficult to back date a vat registration. Registration will apply from the first day of the taxable period.

There is a concession re back dating but quite rare

revenue can make you backdate if you should have been registered and there is a liability. you can't choose to backdate to get a refund.