VAT cash receipts

Heisenburg81

All,

I can't find any guidance on this.

If a trader has been issuing invoices and subsequently becomes an accountable person and registers - If they are granted the cash receipts basis of accounting for VAT are they liable for monies received from debtors which were invoiced pre - VAT registration?

Paddy001

Hi

A trader cannot raise valid VAT invoices without being VAT registered.

Assuming the trader applies to register for VAT and the effective date is the date of application, they will not be liable for VAT on sales prior to that date as they are deemed to be exempt.

When VAT registration is approved it is effective from the requested application date. Accordingly the trader is liable for VAT from that date. In the period between registration being applied for and approved, the trader is in a sort of a limbo as they are subject to VAT but cannot issue VAT invoices. What happens in practice is they issue a "request for payment" and issue the valid VAT invoice upon VAT approval. They would often seek to rely on the rule that a valid VAT invoice does not need to issue until the 15th of the following month.

Calahonda52

Paddy001 wrote: »

Assuming the trader applies to register for VAT and the effective date is the date of application, they will not be liable for VAT on sales prior to that date as they are deemed to be exempt.

Not exempt: exempt has a precise meaning in Tax & especially VAT
https://www.revenue.ie/en/vat/what-is-vat/exemption-from-vat.aspx

Paddy001

Calahonda52 wrote: »

Not exempt: exempt has a precise meaning in Tax & especially VAT
https://www.revenue.ie/en/vat/what-is-vat/exemption-from-vat.aspx

I am aware. However I meant exempt in a basic English sense of the word as it was easier than going into the more detailed explanation. Apologies for any confusion.

Heisenburg81

Paddy001 wrote: »

I am aware. However I meant exempt in a basic English sense of the word as it was easier than going into the more detailed explanation. Apologies for any confusion.

I don't think I was clear in what I was getting at;

I need to know, in respect of invoices issued before the trader breached the threshold or became likely to breach the threshold, same invoices which would have obviously had no reference to VAT - are the monies received on these invoices liable to cash if collected after registration assuming the cash receipts basis?
This would seem penal.

Paddy001

Heisenburg81 wrote: »

I don't think I was clear in what I was getting at;

I need to know, in respect of invoices issued before the trader breached the threshold or became likely to breach the threshold, same invoices which would have obviously had no reference to VAT - are the monies received on these invoices liable to cash if collected after registration assuming the cash receipts basis?
This would seem penal.

Cash receipts in essence means you return VAT based on when your VATable invoices are paid. As the invoices in question were not subject to VAT, there is no VAT due when payment is received.

Heisenburg81

Paddy001 wrote: »

Cash receipts in essence means you return VAT based on when your VATable invoices are paid. As the invoices in question were not subject to VAT, there is no VAT due when payment is received.

Thanks. Makes sense.
I cant see the wood from the trees sometimes.