When to add vat

Kerrytony77

Kerrytony77 wrote:

So if my labour isn’t a 1/3 I’m at loss in vat as in about.

You are thinking about vat in the wrong way.

The vat is separate to your price in that it's not yours. You collect it for the tax man. It is never your money so you can't be at a loss.

Bonzo Delaney

Kerrytony77 wrote: »

Thanks for making that out.

What sort of excel sheet can I make out.

Ps I’m more of a tradesman than office man lol hence the questions

I'm in the same boat as your self Carpenter/Builder
I just write everything down in ledger where I can see all the details and let my accountant deal with revenue .

Forget about charging 23% anywhere out to a private client on a supply and fit basis
The only time I've seen it happen (mods look away) is if your supplying to a principle contractor and it's worth their while to circumvent the RCT system and engage your services in a " supply only" arrangement but that's a whole different ball game and a grey area legally .

Kerrytony77

Sleeper12 wrote: »

You are thinking about vat in the wrong way.

The vat is separate to your price in that it's not yours. You collect it for the tax man. It is never your money so you can't be at a loss.

But I can be at a loss if I’m paying more than I’m collecting.

It’s it meant to be the other way around.

Bonzo Delaney

Kerrytony77 wrote: »

But I can be at a loss if I’m paying more than I’m collecting.

It’s it meant to be the other way around.

It softens the cost on your expenses to run your business
Go over the break down I done for you again you'll see there's no loss
Welcome to the world of self-employed otherwise known as a bag man for the tax man

Kerrytony77

Sleeper12 wrote: »

You are thinking about vat in the wrong way.

The vat is separate to your price in that it's not yours. You collect it for the tax man. It is never your money so you can't be at a loss.

In my last place of employment there were paying out 1000s of vat each term. There accounts package was calculating the vat. But it was always way higher than they expected. So I just don’t want to go down same rd. It calculated the difference and they paid over

Kerrytony77

Kerrytony77 wrote:

But I can be at a loss if I’m paying more than I’m collecting.

No you can't be at a loss. You claim back anything that you pay (in real terms you aren't paying any vat if you get to claim it all back) & charge 13.5 percent.

It takes a bit of getting used to but as I said none of the vat is yours. Its treated totally separate. You only collect it for the revenue.

Kerrytony77

Sleeper12 wrote: »

No you can't be at a loss. You claim back anything that you pay (in real terms you aren't paying any vat if you get to claim it all back) & charge 13.5 percent.

It takes a bit of getting used to but as I said none of the vat is yours. Its treated totally separate. You only collect it for the revenue.

I understand that. But what I’m asking is am i charging the right vat rate and applying it rightly. I know I don’t keep the vat.

But why so as an example where my last employer paying out more vat than he was getting back.

Kerrytony77

Kerrytony77 wrote: »

....

But why so as an example where my last employer paying out more vat than he was getting back.

VAT on sales/services/labour was greater than VAT on purchases.

That's generally to be expected in business TBH unless you don't charge hour clients VAT.

Kerrytony77

Kerrytony77 wrote: »

But why so as an example where my last employer paying out more vat than he was getting back.

Most business pay more than they than they get back. VAT would be a pointless & expensive tax to collect if it didn't work this way.

If your materials cost two thirds the overall price you charge 13.5 percent & you'll always be it a claim back situation.

Materials 100 ex vat claim back 23 vat
Labour 50 ex vat
Total 150 Ex vat
Total 170.25 inc vat 20.25 Vat charged You make 2.75 on the vat

Charge 71 labour on the same job & you'll owe revenue 9c

relax carry on

https://www.revenue.ie/en/vat/vat-on-services/services-taxable-at-the-rate-of-the-goods-the-two/index.aspx

Where the Value-Added Tax (VAT) exclusive cost of goods used in the provision of a service exceeds two-thirds of the total VAT exclusive price you charge to your customer then the full price is taxable at the rate of the goods.

Where the VAT exclusive cost of goods used in the provision of a service does not exceed two-thirds of the total VAT exclusive price then the full price is taxable as a supply of services. This is known as the two-thirds rule.