Client company pays for laptop up front: VAT?

Grolschevik

So:

Sole trader (does own taxes, expenses, treated as contractor) by

Sole client company (no work for any other client)

Primarily on client company premises using client company equipment at client company dictated times.

Client company offers to buy/pay for new laptop upfront for home working.

Laptop will be considered property of sole trader.

But client company to provide ongoing IT support and include sole trader on existing relevant company software licences, so no software cost to trader.

Sole trader is to deduct cost of laptop from her invoices over a defined period, so full cost of laptop including VAT gets repaid to client company.

No finance arrangement/interest payable.

Question re VAT. Who gets to reclaim it?

If the client company, then they are essentially making money on the deal, right?

Rulmeq

The client company paid for it, so they would claim the VAT. They aren't "making" money on it, they are claiming back the portion of the cost that is VAT. However the sole trader will probably have a tax liability on the goods received (if you could bypass PAYE/PRSI/USC by just gifting stuff to people, there would be a lot more "gifts" being giving to CEOs by their companies)

Stratvs

Grolschevik wrote: »

Sole trader is to deduct cost of laptop from her invoices over a defined period, so full cost of laptop including VAT gets repaid to client company.

Is the sole trader not also registered for VAT? (T/O > €37,500pa) if so then she will be deducting the ex VAT cost of the laptop from her ex VAT invoices to the client company. So the "real" cost to her is the net amount.

Stratvs

Grolschevik wrote: »

Sole trader (does own taxes, expenses, treated as contractor) by

Sole client company (no work for any other client)

Primarily on client company premises using client company equipment at client company dictated times.

Nothing to do with VAT but the above sounds terribly like a contract of service (employee) rather than a contract for services (self-employed contractor).
Both parties would want to be very sure of their positions or Revenue and Social Welfare might become interested.

Rulmeq

Stratvs wrote: »

Nothing to do with VAT but the above sounds terribly like a contract of service (employee) rather than a contract for services (self-employed contractor).
Both parties would want to be very sure of their positions or Revenue and Social Welfare might become interested.

Everything about this sounds dodgy. Payment in kind, and trying to claim VAT on top of that as well!

relax carry on

Stratvs wrote: »

Nothing to do with VAT but the above sounds terribly like a contract of service (employee) rather than a contract for services (self-employed contractor).
Both parties would want to be very sure of their positions or Revenue and Social Welfare might become interested.

From the information supplied, the OP would appear to be an employee of the company not a sole trader.

Calahonda52

VAT is not your concern.

You owe them x for the rig, to be paid off by deducting the amount from your pre vat bill: its a debt so no VAT

When they pay for the rig, it will be Credit bank, 1,000, Debit AR-joe bloggs, 1,000
Then when you invoice them, say 2,000 less 200 as a payment.
They will credit AP joe bloggs for 2000 and then debit the Joe bloggs AP acc and credit the joe bloggs AR acc by 200

I assumed the recipient was Vat registered which it seems he is not

Marcusm

Calahonda52 wrote: »

VAT is not your concern.

You owe them x for the rig, to be paid off by deducting the amount from your pre vat bill: its a debt so no VAT

When they pay for the rig, it will be Credit bank, 1,000, Debit AR-joe bloggs, 1,000
Then when you invoice them, say 2,000 less 200 as a payment.
They will credit AP joe bloggs for 2000 and then debit the Joe bloggs AP acc and credit the joe bloggs AR acc by 200

Quote:
Originally Posted by Rulmeq View Post
Everything about this sounds dodgy. Payment in kind, and trying to claim VAT on top of that as well!
.
I don't see it that way: Ready fire aim?

The client company is making a supply of goods (the laptop) and will, presuming it is VAT registered, need to charge VAT on the consideration (value of services) to be provided in return.

Grolschevik

Rulmeq wrote: »

The client company paid for it, so they would claim the VAT. They aren't "making" money on it, they are claiming back the portion of the cost that is VAT. However the sole trader will probably have a tax liability on the goods received (if you could bypass PAYE/PRSI/USC by just gifting stuff to people, there would be a lot more "gifts" being giving to CEOs by their companies)

Trader repays company's upfront outlay, over time.

Stratvs wrote: »

Is the sole trader not also registered for VAT? (T/O > €37,500pa) if so then she will be deducting the ex VAT cost of the laptop from her ex VAT invoices to the client company. So the "real" cost to her is the net amount.

Earns less than the VAT limit and isn't registered.

Stratvs wrote: »

Nothing to do with VAT but the above sounds terribly like a contract of service (employee) rather than a contract for services (self-employed contractor).
Both parties would want to be very sure of their positions or Revenue and Social Welfare might become interested.

relax carry on wrote: »

From the information supplied, the OP would appear to be an employee of the company not a sole trader.

That argument has been had, I believe. I would tend to agree.

Calahonda52 wrote: »

VAT is not your concern.

You owe them x for the rig, to be paid off by deducting the amount from your pre vat bill: its a debt so no VAT

When they pay for the rig, it will be Credit bank, 1,000, Debit AR-joe bloggs, 1,000
Then when you invoice them, say 2,000 less 200 as a payment.
They will credit AP joe bloggs for 2000 and then debit the Joe bloggs AP acc and credit the joe bloggs AR acc by 200

That makes sense, thanks.

Calahonda52

Marcusm wrote: »

The client company is making a supply of goods (the laptop) and will, presuming it is VAT registered, need to charge VAT on the consideration (value of services) to be provided in return.

Just to say please ignore my contribution here.:o:o:o