Cross boarder VAT

paulmerson22

I have a question regarding cross boarder vat.
Please indulge me.
I have a VAT number for a sole trader account, its never used Ive been filing nil returns for the last number of years.
I happened to be purchasing a watch online from dealer within the EU, there is an option for provide a VAT number which would mean youre not paying vat on the transaction and would have to declare it in Ireland and pay the vat on it here.

What is stopping me from not declaring the purchase and avoiding the vat altogether ?

Is there any type of European centralized Vat system, where these transactions are logged and can be referenced in the future by revenue

ari101

paulmerson22 wrote: »

I have a question regarding cross boarder vat.
Please indulge me.
I have a VAT number for a sole trader account, its never used Ive been filing nil returns for the last number of years.
I happened to be purchasing a watch online from dealer within the EU, there is an option for provide a VAT number which would mean youre not paying vat on the transaction and would have to declare it in Ireland and pay the vat on it here.

What is stopping me from not declaring the purchase and avoiding the vat altogether ?

Is there any type of European centralized Vat system, where these transactions are logged and can be referenced in the future by revenue

When you report VAT on the VAT3 for intra community acquisitions you don't pay VAT. Both the figures in T1 and T2 are increased by the same amount so they net off, and you report the gross euro value of the goods purchased in E2.

The seller will report the sale to their Revenue under VIES using the VAT number you gave. Don't know if any follow up or if any cross referencing at this level is being done. However as you don't actually pay any VAT, not a huge incentive to leave it unreported.

E.g. buying goods from EU with value of 100 eur vatable at 21%:
T1: 21
T2: 21
T3: 0
T4: 0
E1: 0
E2: 100
ES1: 0
ES2: 0

paulmerson22

It would be a personal purchase though.
So Im wondering if I could take advantage of the fact I have a valid vat number. The purchase would be made through a personal account.

Is there any way it could come back to bite me

Car99

paulmerson22 wrote: »

It would be a personal purchase though.
So Im wondering if I could take advantage of the fact I have a valid vat number. The purchase would be made through a personal account.

Is there any way it could come back to bite me

No chance whatsoever of getting caught . Revenue are a very inefficient badly run department who are very easily outsmarted. Go for it.

(Pleae read my reply with a sarcastic tone)

paulmerson22

Car99 wrote: »

No chance whatsoever of getting caught . Revenue are a very inefficient badly run department who are very easily outsmarted. Go for it.

Thanks for the advice, that's exactly what I was thinking

relax carry on

paulmerson22 wrote: »

It would be a personal purchase though.
So Im wondering if I could take advantage of the fact I have a valid vat number. The purchase would be made through a personal account.

Is there any way it could come back to bite me

Can't tell if this is a genuine question or not. You are aware that using your VAT number in that way is fraud. Of course your vat number will be reported by the seller. They have to to fulfill their VAT obligations.

paulmerson22

relax carry on wrote: »

Can't tell if this is a genuine question or not. You are aware that using your VAT number in that way is fraud. Of course your vat number will be reported by the seller. They have to to fulfill their VAT obligations.

Its a genuine question,
I realise it would be fraud and I realise I sound like idiot.

RUDOLF289

ari101 wrote: »

When you report VAT on the VAT3 for intra community acquisitions you don't pay VAT. Both the figures in T1 and T2 are increased by the same amount so they net off, and you report the gross euro value of the goods purchased in E2.

The seller will report the sale to their Revenue under VIES using the VAT number you gave. Don't know if any follow up or if any cross referencing at this level is being done. However as you don't actually pay any VAT, not a huge incentive to leave it unreported.

E.g. buying goods from EU with value of 100 eur vatable at 21%:
T1: 21
T2: 21
T3: 0
T4: 0
E1: 0
E2: 100
ES1: 0
ES2: 0

That would only apply if the watch is for the OP's business. How likely is that?

There is a matching process through the VIES database.

Having filed nil returns and then all of a sudden looking for a reclaim of VAT (there is no offset because there is no sales .....)

I would not take the chance, simple as. Pay the VAT due.

RUDOLF289

paulmerson22 wrote: »

Thanks for the advice, that's exactly what I was thinking

The matching process takes place in the EU.......... And yes, there is a chance you "get away with it". Just be aware that these systems run on very powerful algorithms.

Just because you happen to have a VAT number - that has not seen any activity - I am sure this will "pop up" at some stage.

For somebody on Boards.ie to advise to commit fraud is frankly heprehensible.

Marcusm

Car99 wrote: »

No chance whatsoever of getting caught . Revenue are a very inefficient badly run department who are very easily outsmarted. Go for it.

For VAT, anomalies between the VIES returns for intracommunity acquisitions and supplies are regularly monitored and chased by Revenue with individual letters. I have seen some of these for as little as a few thousand and Irish suppliers who receive 100s of these letters each month. (Generally this arises due to deficiencies in VAT number reporting rather than fraud, as in this case.). It’s one of the few areas where there is true automation as the returns are completed electronically allowing simple comparison and identification of anomalies.

Car99

Marcusm wrote: »

For VAT, anomalies between the VIES returns for intracommunity acquisitions and supplies are regularly monitored and chased by Revenue with individual letters. I have seen some of these for as little as a few thousand and Irish suppliers who receive 100s of these letters each month. (Generally this arises due to deficiencies in VAT number reporting rather than fraud, as in this case.). It’s one of the few areas where there is true automation as the returns are completed electronically allowing simple comparison and identification of anomalies.

I was being sarcastic every man and his dog knows that Revenue are the most efficient and well run department in the state and especially when it comes to VAT collection.

For what's it's worth by the OP's reply he undoubtedly picked up on my sarcasm.

Lenar3556

Car99 wrote: »

I was being sarcastic every man and his dog knows that Revenue are the most efficient and well run department in the state and especially when it comes to VAT collection.

For what's it's worth by the OP's reply he undoubtedly picked up on my sarcasm.

I’m not sure I would share your view that Revenue are ultra efficient. Many of the processes are antiquated, unlinked and VAT is one of the bigger offenders. The equivalent of PAYE modernisation is well overdue.

In years gone by it was all to common for individuals to buy a tank of fuel at an ROI petrol station on the way to Northern Ireland and quote the VAT number on the receipt to an NI supplier to avoid VAT on another purchase.

That day is gone, and as others have pointed out the VIES is now much better integrated into Revenue’s systems. I wouldn’t chance it.