How to Choose the Right Accounting Firm?

The problem of VAT keeps coming up.

On the one hand, one accountant says I am liable. Another says that due to my international customers and the relatively passive nature of the income and type of digital resource on sale, that VAT is not applicable.

A third accountant argues in favour of VAT distance sales.

Nobody has a clue what the correct answer is!

And this is important, too, because this has grave implications. If I am not liable for VAT, that is considerably more advantageous. Given my digital resource on sale is educational in nature, I also hoped that it would not be subject to any form of VAT.

But when I reach out to accountants who are all given the same set of information, nobody has a clue. How is this possible?

antoinolachtnai

If you are uncertain and feel there are issues that are beyond the accountants you have consulted them you need to bring in a tax professional who has specialised knowledge of VAT. They will work in conjunction with your accountants to find an answer.

Pawwed Rig

If they don't have a clue goto someone who does. Look at the firm website. Look at the people link. Find the VAT partner and contact them. VAT can be complicated but it is not that difficult. Many smaller firms wouldn't have the necessary expertise to properly advise on non standard VAT so best goto a specialist where there is doubt. Ignore the big 4 firms as they would be too expensive but any of the next 7 or 8 largest would have a VAT partner that could give you written advice on the matter.

If you want to pay bargain basement fees you get bargain basement advice

Pawwed Rig

Pawwed Rig wrote: »

If they don't have a clue goto someone who does. Look at the firm website. Look at the people link. Find the VAT partner and contact them. VAT can be complicated but it is not that difficult. Many smaller firms wouldn't have the necessary expertise to properly advise on non standard VAT so best goto a specialist where there is doubt. Ignore the big 4 firms as they would be too expensive but any of the next 7 or 8 largest would have a VAT partner that could give you written advice on the matter.

If you want to pay bargain basement fees you get bargain basement advice

It's quite incredible.

As a sole trader, you lose 49pc or so via tax.

Now, I'm learning that 23.5% extra per transaction may need to be added on (though hopefully not) - which will further deter future sales as the price of the product increases.

This is clearly anti-business. How the hell are people expected to grow businesses with this kind of obscene levels of tax burden.

It's a total disgrace.

antoinolachtnai

[Deleted User] wrote: »

It's quite incredible.

As a sole trader, you lose 49pc or so via tax.

Now, I'm learning that 23.5% extra per transaction may need to be added on (though hopefully not) - which will further deter future sales as the price of the product increases.

This is clearly anti-business. How the hell are people expected to grow businesses with this kind of obscene levels of tax burden.

It's a total disgrace.

VAT is a tax on consumption, not on production.

The VAT rates are set by the individual states. If you don’t want to do business in States with high rates then you don’t have to, or you can just charge more.

Personal tax has little enough to do with reinvesting to grow businesses. From your posts it seemed that you wanted to withdraw money to support your lifestyle rather than to grow the business. If you want to reinvest profits then the tax situation is very different.

Well let's throw the argument out there.

I own various education websites. For example: someone can register to one of my sites, pay a flat fee, and are then redirected to a membership portal where they can access online tools such as practice MCQs, digital flashcards, theory summaries. They have access for perhaps 6-months or 1-year depending on which package they purchase. There is no formal tutor or anything like that. People register as and when they choose; hence the more passive nature of it.

These users come from all over the world.

So, the question becomes: is this VAT-able, and does it mean that each user, no matter which country they are registering from, are all subject to the same Irish 23.5% rate?

That's the matter in a nutshell, and it's the same information I provided the accountants.

antoinolachtnai

The answers to your questions are yes and no.

How to calculate the VAT correctly and account for it with the various authorities is what it sounds like you need the advice on. This will depend on your circumstances.

antoinolachtnai

antoinolachtnai wrote: »

The answers to your questions are yes and no.

How to calculate the VAT correctly and account for it with the various authorities is what it sounds like you need the advice on. This will depend on your circumstances.

So there could be 150 VAT bills because customers happen to come from 150 countries?

Pawwed Rig

[Deleted User] wrote: »

So there could be 150 VAT bills because customers happen to come from 150 countries?

Again it depends. I am assuming you are B2C so Irish VAT will apply in many situations.
I would warn you though that there are changes coming on June 30th so anything you figure out now could be out the window then.

Pawwed Rig

Pawwed Rig wrote: »

Again it depends. I am assuming you are B2C so Irish VAT will apply in many situations.
I would warn you though that there are changes coming on June 30th so anything you figure out now could be out the window then.

If that's the case, then presumably I'll have to retrospectively pay VAT on my transactions when I was living in two different EU jurisdictions over the past 4-years.

Furthermore, many of these transactions (perhaps 40%) are through PayPal but having just reviewed PayPal payments now, they do not give you a function to learn from where the purchase was made. Yet another disaster.

Christ almighty.

antoinolachtnai

The VAT has to do with where the customers are located more than where the supplier is located.

Your advisors should be able to help you estimate your historic liability where the records kept are not sufficiently comprehensive.

davindub

Look VAT on services is complicated and there has been changes over the last 10 years (and this year, last year). I think you do need to give the persons you are seeking advice from a chance to determine exactly what it is you do and the rules that apply, which means an engagement to fully examine your business and the specific rules.

Based on the information given and a little guess work as to what you do, there are specific e-services rules. The place of supply is where the customer is located.

You use MOSS (OSS coming later this year) to deal with EU VAT.

Outside of EU charge Irish VAT, unless you can verify (eg credit card and IP checks) & you may have a liability where you supply the e-service as well. Watch the UK, the situation is developing.

There are circumstances where the standard B2C rules apply even if delivering services online so they will also need to be ruled out.

But you need to register for VAT if you supply e services outside the state to EU in excess of 10k. But if supplying non e services, the same threshold will apply from July anyway.

You should be able to find a firm specialising in e-services.

davindub

davindub wrote: »

Look VAT on services is complicated and there has been changes over the last 10 years (and this year, last year). I think you do need to give the persons you are seeking advice from a chance to determine exactly what it is you do and the rules that apply, which means an engagement to fully examine your business and the specific rules.

Based on the information given and a little guess work as to what you do, there are specific e-services rules. The place of supply is where the customer is located.

You use MOSS (OSS coming later this year) to deal with EU VAT.

Outside of EU charge Irish VAT, you may have a liability where you supply the e-service as well. Watch the UK, the situation is developing.

There are circumstances where the standard B2C rules apply even if delivering services online so they will also need to be ruled out.

But you need to register for VAT if you supply e services outside the state to EU in excess of 10k. But if supplying non e services, the same threshold will apply from July anyway.

You should be able to find a firm specialising in e-services.

Okay I see, thanks for that.

Just one question. How does this mean I charge customers VAT in future?

Can I charge them all 23.5% VAT on checkout anyway? Or does this involve a system where the charge must be per country / EU state or something like that?

I'm unsure what the standard convention is regarding this.

davindub

[Deleted User] wrote: »

Okay I see, thanks for that.

Just one question. How does this mean I charge customers VAT in future?

Can I charge them all 23.5% VAT on checkout anyway? Or does this involve a system where the charge must be per country / EU state or something like that?

I'm unsure what the standard convention is regarding this.

Sorry I'm not clear on your question regarding the future?

I made an edit to the post above, I deleted something I shouldn't have, e-services outside the EU are not in scope for EU VAT, but the onus is on you to verify this.

You must charge VAT at the correct rate per state (Ireland is 23%) and be able to report on sales

tanit

Deleted User wrote: »

Okay I see, thanks for that.

Just one question. How does this mean I charge customers VAT in future?

Can I charge them all 23.5% VAT on checkout anyway? Or does this involve a system where the charge must be per country / EU state or something like that?

I'm unsure what the standard convention is regarding this.

I am not sure if this a problem of you not knowing enough about the subject or the advice not being good enough.

First, there is no 23.5% Vat rate in either Ireland or the EU right now (I have checked the EU rates and no country has that exact rate).

Second depending on the type of service/online you have different reporting requirements. Also the reporting requirements are changing in June at EU level and you might be affected by them. So I highly recommend you to follow the advice given previously in this thread and talk with Chartered Tax Advisor or directly made the query to Revenue. If you make the query to Revenue be aware that that might need to disclosures you might need to make and timing for those disclosures can become tight if you are trying to do it on your own, so I recommend you to go to an advisor with expertise in this area.

I was told by my accountant that to fully resolve the VAT issue, it would cost 1,200 euros + VAT for researching the question (6 hours) to learn what applies to my case and what doesn't.

This came as quite a shock, I was not expecting a 1,200 euros + VAT bill for researching a VAT-related question (1,476 euros in total).

Is this a normal rate?

I find it unbelievably high!!! :eek:

Shocked, to say the least.

Pawwed Rig

From reading this thread I would be charging you that much or more as it sounds like an absolute mess to figure out and will be labour intensive.

Professional fees are expensive. You might get it cheaper elsewhere but equally there are places you will pay more.

Pawwed Rig

Pawwed Rig wrote: »

From reading this thread I would be charging you that much or more as it sounds like an absolute mess to figure out and will be labour intensive.

Professional fees are expensive. You might get it cheaper elsewhere but equally there are places you will pay more.

True, but how can one be certain of finding an answer within a defined time frame?

Surely it's possible that at the end, there is still uncertainty and so I could be given another 6-hour bill + VAT?

I don't know how certainty is built into this.

Tow

Deleted User wrote: »

I don't know how certainty is built into this.

Probably none. Just as they will probably not indemnify you if Revenue decide their advice was wrong, several years later etc.

capefear

Deleted User wrote: »

I was told by my accountant that to fully resolve the VAT issue, it would cost 1,200 euros + VAT for researching the question (6 hours) to learn what applies to my case and what doesn't.

This came as quite a shock, I was not expecting a 1,200 euros + VAT bill for researching a VAT-related question (1,476 euros in total).

Is this a normal rate?

I find it unbelievably high!!! :eek:

Shocked, to say the least.

A tax consultant we use charges 175+vat an hour. To be honest yes its alot but its worth spending the money for peace of mind as if you get vat wrong it will cost you alot more than 1200 to fix. The 1200 will include a written report specific for your situation and if you are giving the wrong advice at least you would have some recourse as the tax consultant will have PII insurance. This advice would only be applicable to the current vat law as it might change over the years.

Tow

Tow wrote: »

Probably none. Just as they will probably not indemnify you if Revenue decide their advice was wrong, several years later etc.

capefear wrote: »

A tax consultant we use charges 175+vat an hour. To be honest yes its alot but its worth spending the money for peace of mind as if you get vat wrong it will cost you alot more than 1200 to fix. The 1200 will include a written report specific for your situation and if you are giving the wrong advice at least you would have some recourse as the tax consultant will have PII insurance.

I hate to have to ask this question, but what Tow said is on my mind. As I will be spending a vast sum of money on this, it seems only reasonable to ask the question: what if the advice is wrong?

Tow says that I will not be indemnified - meaning I would be liable for any error.

However, CapeFear argues that I would have "some recourse as the tax consultant will have PII insurance".

So, which is it?

And second, should I even bring this insurance / error, issue up with the accountant - or is this considered extremely bad manners?

I don't want to come across as offensive to his intelligence and expertise but, at the same time, I need to think about these matters and their potential long-term implications.

Also, not sure if it helps but this is my accountant doing the research. It hasn't been outsourced to a specialist tax consultant on VAT.

hold my beer

mrslancaster wrote: »

You could always speak to Revenue directly - they have a whole section that deals with VAT. Then you'd be sure of getting the correct advice and you won't incur professional fees.

Revenue won't give out such advice. If they were to start doing it they'd be completely swamped within months with endless requests for advice. They'll answer simple questions via MyEnquiries. And will answer specific technical queries, such as interpretation of laws and such, via the Revenue Technical Service. Other than that, they expect Officers of companies and businesses to make sure they know the rules and follow them. And if they don't, pay someone else to do it.

OP, you need to look at this as a cost of doing business. You will hopefully only have to do it once, and you can then follow that advice unless you hear of something new or your business changes.