Can I claim VAT even if I have collected less VAT than claiming?

businessdit

I registered a company last year.

Got my VAT number and made a significant investment in machinery.
The VAT charged on this amounted to over 10,000.

We have limited sales and haven't really collected VAT as a company yet.
Can I still claim the 10,000 back even though i haven't collected that much VAT?

Thanks
Alan

Timbo1987

Yes, you will be in a refund position for the period, Vat Sales 500 Vat Purchases 10K = Refund 9.5K

Make sure you hang on to receipts as Revenue may ask for them.

Also if purchases were before you were Vat registered you may be out of luck.

drunkmonkey

The do don't like giving refunds, even a small one could trigger a mini vat audit, just have your paperwork in order and ready to hand to them if asked to go see them. A good accountant is priceless.

businessdit

drunkmonkey wrote: »

The do don't like giving refunds, even a small one could trigger a mini vat audit, just have your paperwork in order and ready to hand to them if asked to go see them. A good accountant is priceless.

Hi.

Thanks for the info folks. Yes I have a good accountant but im still failing to understand the refund side of things.

Timbo1987 wrote: »

Yes, you will be in a refund position for the period, Vat Sales 500 Vat Purchases 10K = Refund 9.5K

Thanks. I still can't understand how in this example I don't claim a refund for the full 10k given that the 500 collected will be sent to revenue. So will the company be loosing out due to the small level of sales..?

Thanks
Alan

ScouseMouse

The 500 wont be sent to revenue. Unless you are paying monthly and doing a balance at the end of your tax year, what will happen is the accountant will calculate your vat liability at year end, then declare it.

I.E. you took in 500 VAT for the tax man, but you are entitled to claim back 10,000 euro vat. So by doing the sums, +500 less -10,000, your VAT return will trigger a refund from revenue. This is not that unusual, but sometimes it triggers a mini audit or they may ask you to send in your top 5 VAT purchases for a quick look.

Timbo1987

hey Alan.

the 500 is a figure i just made us for an example. I've no idea what your Vat on Sales is.

So if you Vat period is say Mar-Apr then you'll get your sales and purchases for those months and compare the Vat.

If vat on sales is higher, you pay revenue. If vat on purchases is higher, revenue pays you.

Either way its just the difference between one and the other is either paid by you or paid to you.

Make sense?

businessdit

ScouseMouse wrote: »

The 500 wont be sent to revenue. Unless you are paying monthly and doing a balance at the end of your tax year, what will happen is the accountant will calculate your vat liability at year end, then declare it.

I.E. you took in 500 VAT for the tax man, but you are entitled to claim back 10,000 euro vat. So by doing the sums, +500 less -10,000, your VAT return will trigger a refund from revenue. This is not that unusual, but sometimes it triggers a mini audit or they may ask you to send in your top 5 VAT purchases for a quick look.

Timbo1987 wrote: »

hey Alan.

the 500 is a figure i just made us for an example. I've no idea what your Vat on Sales is.

So if you Vat period is say Mar-Apr then you'll get your sales and purchases for those months and compare the Vat.

If vat on sales is higher, you pay revenue. If vat on purchases is higher, revenue pays you.

Either way its just the difference between one and the other is either paid by you or paid to you.

Make sense?

OK I think I understand - thanks!

So in the 500 euro example - I don't sent them VAT collected until I breach the 10,000 euro mark. I can hang onto the 500 collected until I go over the 10,000 euro mark which is what I was charged in VAT?

Thanks folks!
Very helpful.

Timbo1987

businessdit wrote: »

OK I think I understand - thanks!

So in the 500 euro example - I don't sent them VAT collected until I breach the 10,000 euro mark. I can hang onto the 500 collected until I go over the 10,000 euro mark which is what I was charged in VAT?

Thanks folks!
Very helpful.

Not quite.

So your vat periods will either be 2 monthly, 3 monthly, 6 monthly or Annually.

You will charge Vat on your Sales and in turn you will be charged Vat on your Purchases.

There is no limit.

if you only have €13 Vat on Sales and €10 Vat on Purchases then Revenue will want the €3 owed to them.
It works the other way too. If you have no Vat on Sales but 10K Vat on Purchases then you claim a refund of the 10K

Have a chat with your accountant who will explain better based on your circumstances

businessdit

Timbo1987 wrote: »

Not quite.

So your vat periods will either be 2 monthly, 3 monthly, 6 monthly or Annually.

You will charge Vat on your Sales and in turn you will be charged Vat on your Purchases.

There is no limit.

if you only have €13 Vat on Sales and €10 Vat on Purchases then Revenue will want the €3 owed to them.
It works the other way too. If you have no Vat on Sales but 10K Vat on Purchases then you claim a refund of the 10K

Have a chat with your accountant who will explain better based on your circumstances

Ok thanks!

I'll talk to my accountant.

For the purposes of the example you gave can you re-insert the figures you gave as they have come out as €13 & €10.

Thanks
for the help
Alan

Timbo1987

Sure it was just 13 euro and 10 euro with a balance of 3 euro

Whatever the figures are is what they are. I have filed vat returns for 1 euro payable to revenue and paid it!!!

businessdit

Timbo1987 wrote: »

Sure it was just 13 euro and 10 euro with a balance of 3 euro

Whatever the figures are is what they are. I have filed vat returns for 1 euro payable to revenue and paid it!!!

Thanks!

Calahonda52

Op: you can't have it both ways in the sense that you want to reclaim the 10,000 and not pay any VAT you have received on sales, no matter how small.
To reclaim the 10k you need to make a full VAT return..
My guess is you will have an audit, perhaps even before the 10K is refunded as its a well known VAT scam.
The audit just wont be for VAT, it will be everything, personal and company

businessdit

Calahonda52 wrote: »

Op: you can't have it both ways in the sense that you want to reclaim the 10,000 and not pay any VAT you have received on sales, no matter how small.
To reclaim the 10k you need to make a full VAT return..
My guess is you will have an audit, perhaps even before the 10K is refunded as its a well known VAT scam.
The audit just wont be for VAT, it will be everything, personal and company

Hi,

Are you saying this based on experience, or just guessing.

Surely a lot of companies in start up stage claim the VAT back on initial capital investment?

Thanks
Alan

relax carry on

businessdit wrote: »

Hi,

Are you saying this based on experience, or just guessing.

Surely a lot of companies in start up stage claim the VAT back on initial capital investment?

Thanks
Alan

You are right of course. Your return will most likely be selected for some verification purposes as it's your first with a large refund claim with little to no sales. So long as you have back up to your vat workings you'll be fine.

jimmycrackcorm

businessdit wrote:

Surely a lot of companies in start up stage claim the VAT back on initial capital investment?

That's normal enough but it's not to say that you'll automatically get audited in the first year. They have a system that looks for potential audit profiles. So it may not flag you if someone else in the same sector shows the same pattern of an initial capital outlay followed by sales later on.