VAT Impact

stesaurus

I'm trying to find the relevant information online but Google is letting me down today.
My brother in law is self employed and VAT registered. He charges VAT on his single monthly invoice to his employer. The only thing he claims back on VAT is for fuel. So each month he's paying more than 500 to VAT.
Isn't there supposed to be an equalisation method so that he doesn't get negatively impacted like this?

Calahonda52

He is not paying 500 on VAT
He is passing on to Revenue what he got from his employer.
VAT is never income for him to spend

stesaurus

I know how VAT works and that it's not his money to think of. That's not what I meant.

He should be reclaiming VAT on anything he can not just fuel for a start.

stesaurus

Braelyn Melodic Virtuoso wrote: »

He should be reclaiming VAT on anything he can not just fuel for a start.

His diesel, insurance and van rental are all the eligible items he has.
Can't find the relevant areas on revenue website. Nearest thing I can find is on CI site
https://www.citizensinformation.ie/en/money_and_tax/tax/income_tax/taxation_of_self_employed_people.html

The difference between the VAT charged by you and the VAT you were charged must be paid to the Revenue. If the amount of VAT paid by you exceeds the VAT charged by you, Revenue will repay the excess. This ensures that VAT is paid by the ultimate customer and not by the business.

Stratvs

He is not being negatively impacted.
He charges say €1,000 +VAT (whichever rate 13.5% or 23% as applies to him) say €230 in VAT
The customer claims €230 VAT input credit.
At this point Revenue are in no gain no loss.
Say he pays €100 VAT on allowable inputs. Then he pays Revenue €130 instead. So he's got back the VAT on his costs. The VAT that his suppliers in turn passed to Revenue. So still no gain/loss to Revenue.
Ultimately some non-VAT registered party may pay for the end product/service in the chain (if it's a VATable item) and Revenue get to keep that VAT.