Downside to registering for VAT?

Siamsa Sessions

Hi all,

I'm trying to diversify the farm income and looking at various EU funding schemes where me and the farm might be part of a research project. Based on looking at the T&Cs on various EU websites, it looks like being registered for VAT might make things more straightforward from their admin point-of-view.

So, my question: is it a big job to register for VAT with our Revenue website: https://www.revenue.ie/en/vat/vat-registration/how-do-you-register-for-vat/index.aspx

And if things never worked out with the oul millions I think I'll get from Brussels, would there be any downsides for my own individual tax return if I was VAT-registered?

Thanks.

yosemitesam1

Siamsa Sessions wrote: »

Hi all,

I'm trying to diversify the farm income and looking at various EU funding schemes where me and the farm might be part of a research project. Based on looking at the T&Cs on various EU websites, it looks like being registered for VAT might make things more straightforward from their admin point-of-view.

So, my question: is it a big job to register for VAT with our Revenue website: https://www.revenue.ie/en/vat/vat-registration/how-do-you-register-for-vat/index.aspx

And if things never worked out with the oul millions I think I'll get from Brussels, would there be any downsides for my own individual tax return if I was VAT-registered?

Thanks.

If you're on Ros it's straight forward to register and do returns. Whether or not it actually makes sense to is another thing that you'll have to work out yourself with accountant

Siamsa Sessions

yosemitesam1 wrote: »

If you're on Ros it's straight forward to register and do returns. Whether or not it actually makes sense to is another thing that you'll have to work out yourself with accountant

Thanks for that. I do my own tax returns via ROS and I'm just a little worried that being registered for VAT would make the process more complex. I can just about figure it out as it is

K.G.

Without any experience id say you have.to work out how much 0 vat imputs you use verus paying vat on sales.its usally a zero sum game but wirth extra headaches if ration and fertilizer are your biggest Inputs but maybe others know better

yosemitesam1

Siamsa Sessions wrote: »

Thanks for that. I do my own tax returns via ROS and I'm just a little worried that being registered for VAT would make the process more complex. I can just about figure it out as it is

If you do your own returns there's no work in the vat. There's a summary form at the end of the year of imports/exports and vat claimed but it's straightforward

blue5000

K.G. wrote: »

Without any experience id say you have.to work out how much 0 vat imputs you use verus paying vat on sales.its usally a zero sum game but wirth extra headaches if ration and fertilizer are your biggest Inputs but maybe others know better

You'd be losing about 5% on all sales. More complicated, but could you set up a limited company to register for vat?

Siamsa Sessions

blue5000 wrote: »

You'd be losing about 5% on all sales. More complicated, but could you set up a limited company to register for vat?

Thanks - I’ll look into that option too. As ever, there’s a few options and all seem complex in their own way.

sandman30

Siamsa Sessions wrote: »

Hi all,

I'm trying to diversify the farm income and looking at various EU funding schemes where me and the farm might be part of a research project. Based on looking at the T&Cs on various EU websites, it looks like being registered for VAT might make things more straightforward from their admin point-of-view.

So, my question: is it a big job to register for VAT with our Revenue website: https://www.revenue.ie/en/vat/vat-registration/how-do-you-register-for-vat/index.aspx

And if things never worked out with the oul millions I think I'll get from Brussels, would there be any downsides for my own individual tax return if I was VAT-registered?

Thanks.

The accountant cost will probably near double if they do the vat for you. Takes a good bit of extra time. Also you need proper vat invoices with your name on, not just receipts, which can sometimes be a hassle. Most businesses have to do a vat return monthly I think. There is an option to do it annually, but you have to persuade revenue to let you use it.

Generally being VAT registered will be at best breakeven, unless you're buying lots of machinery. A lot of fixed investment such as sheds is reclaimable anyway.

If you deregister you have to look back 3 years to see if there was a benefit to you and pay it back.

Depending what the diversification was, it might be possible to vat register that part of the business and leave the farm unregistered?

Siamsa Sessions

sandman30 wrote: »

Depending what the diversification was, it might be possible to vat register that part of the business and leave the farm unregistered?

Thanks for the insights. This last bit sounds like a limited company, separate from the farm, might be the way to go.

duffysfarm

when you think about it the vat is a trading expense. So say for example you have €2,000 in total in vat on purchases in the year and you are paying tax at the higher rate then this reduces your profit by €2k and in turn your tax by €1k
now if you register for vat then your costs are reduced by €2k and your profit goes up by €2k and you tax bill goes up by €1k!

sandman30

Siamsa Sessions wrote: »

Thanks for the insights. This last bit sounds like a limited company, separate from the farm, might be the way to go.

I think you would be able to remain a sole trader for both, if you didn't want a limited company, but would need separate bank accounts. An accountant could advise better

Siamsa Sessions

sandman30 wrote: »

I think you would be able to remain a sole trader for both, if you didn't want a limited company, but would need separate bank accounts. An accountant could advise better

Cheers - thanks for that.


I've various notes made and a list of people to talk to about it all.

If you burn a lot of diesel (white diesel in particular) or are planning on buy machinery or a crewcab/ commercial jeep or van etc there are big savings to be made by vat registering too.

Cavanjack

Jennifer Clever Hobo wrote: »

If you burn a lot of diesel (white diesel in particular) or are planning on buy machinery or a crewcab/ commercial jeep or van etc there are big savings to be made by vat registering too.

If you buy a crew cab and drive it to your paye job spending day 4K a year on white diesel can you still claim back all the vat for crew cab, diesel and repair or is it a percentage?

Millionaire only not

Revenue love u a lot more being registered for vat expect audits which will cost u !
Be there done that stay well clear if your not making something substantial !

Also your vat is now not against tax so in on one hand out on the other ! Fully offset against tax if ur not registered and hassle free !

1373

Cavanjack wrote: »

If you buy a crew cab and drive it to your paye job spending day 4K a year on white diesel can you still claim back all the vat for crew cab, diesel and repair or is it a percentage?

Is that only if you’re registered for vat ?

Cavanjack

Cavanjack wrote: »

If you buy a crew cab and drive it to your paye job spending day 4K a year on white diesel can you still claim back all the vat for crew cab, diesel and repair or is it a percentage?

You can reclaim all the VAT on purchase no problem. The diesel technically you can’t reclaim the commuting diesel but most would reclaim at least a good chunk of it if not all. There is plenty reclaiming the vat on diesel for the wives car too out there and getting away with it but they are taking a risk if questioned on the amount burned.

Keepgrowing

Calculate the total vat received on all sales

Calculate all vat payable on inputs

The difference will help your decision

No Vat on feed, fert and Bps. If they’re your biggest spends and income, that’s another calc.

Cavanjack

1373 wrote: »

Is that only if you’re registered for vat ?

Yeah