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Sole Trader and business greenhorn - Couple of (domestic) VAT questions

  • 31-12-2022 11:41pm
    #1
    Registered Users Posts: 3,849 ✭✭✭


    Hi all,

    I would be most grateful for any help with this...

    I'm a sole trader (local media production service) and registered for "domestic only" VAT.

    When doing my VAT returns every two months, I only claim VAT back on products/services bought from Irish companies. If I purchase supplies/services from abroad, I simply pay the full whack and suck it up. Is this the correct approach?

    Should I consider applying for intra-EU status to save money on (European) expenses, even though my service is only available to Irish entities?

    I calculate my motoring expenses based on an assumption that 75% of my motoring is for business purposes. My accountant is OK with this. It's probably much more than that but I'm happy to err on the side of caution. Anyway, I claim back VAT on petrol, based on this figure, so if I put €123 of petrol in my car in a week, my VAT claim would end up being €17.25 rather than €23. Does this sound about right? I saw another thread on motoring expenses and there didn't seem to be much consensus on the best approach.

    Finally - I'm doing my 2022 profit & loss at the moment. I'm guessing my revenues and expenses should be net of VAT?

    Thanks again for any responses to these questions.

    Tagged:


Comments

  • Registered Users Posts: 8,291 ✭✭✭Gloomtastic!


    You are only able to claim vat back on diesel not petrol I’m afraid.



  • Registered Users Posts: 3,849 ✭✭✭condra


    Thanks for letting me know. Looks like I owe revenue another couple of hundred quid. Will bring it up with my accountant.



  • Registered Users Posts: 8,291 ✭✭✭Gloomtastic!


    To offset the vat on petrol, get yourself a small decal sticker with your company name/logo and contact details and stick it on your car. The car is now working for you 100% of the time and is claimable.



  • Registered Users Posts: 6,521 ✭✭✭Allinall




  • Registered Users Posts: 8,291 ✭✭✭Gloomtastic!


    So you’re collecting the kids from school in a car advertising your business. Why is that not claimable?



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  • Registered Users Posts: 6,521 ✭✭✭Allinall


    Because the expense is not wholly and exclusively incurred in the course of the business.



  • Registered Users Posts: 8,291 ✭✭✭Gloomtastic!


    But you’re allowed claim your mobile phone and broadband bills. Not all of them will be exclusively business.

    I’m going to check with Revenue on this one and get back to you.



  • Registered Users Posts: 3,849 ✭✭✭condra


    Thanks for all the replies and discussion. I really need to brush up on this stuff.



  • Registered Users Posts: 3,849 ✭✭✭condra


    I was under the impression that one must attribute some proportionality to shared expenses (between business and personal) i.e only claim for a certain percentage of a households bills.



  • Registered Users Posts: 1,297 ✭✭✭walterking


    So does Gloomtastic. He is entirely wrong in what he says.

    If you own your own car then claim mileage for any business driving other than to and from your primary place of work



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  • Registered Users Posts: 8,291 ✭✭✭Gloomtastic!


    Pretty sure I ran the idea past an accountant at the time. Thinking about it, why does any company bother putting signage on their vehicles? To advertise their products and services. Does this stop when you have kids in the vehicle?



  • Registered Users Posts: 8,291 ✭✭✭Gloomtastic!


    So I sent the Revenue’s press office a link to this thread and here’s their reply. Nothing about decals on vehicles unfortunately so we’re none the wiser. (I’ve replied to them asking to clarify).


    Yes, you should apply for ‘intra-EU’ status because you are trading with businesses elsewhere in the European Union. The fact that your services are only supplied to Irish businesses does not rule you out from applying for it and having an intra-EU VAT registration number will allow you to acquire goods and services from suppliers in other Member States at 0% VAT rate. You would then simply self-account for the purchases in your VAT return and claim deductibility where applicable at the same time. Because you have a ‘domestic-only’ VAT registration number at present, the foreign trader is obliged to charge you domestic VAT at the rate applying in his/her own Member State. So the 1st step is to contact the Tax office dealing with your tax affairs and advise them that you are purchasing goods and services from other EU Member States and that you require an intra-EU number. They will advise you of any additional information they need from you to allow them to facilitate your request. When you say that you ‘simply pay the full whack and suck it up’, I’m assuming that you haven’t tried to claim back the VAT you paid to suppliers in other Member States. Any Irish VAT registered trader who has paid VAT in another EU Member State can claim the VAT back from that Member State. This can be done by submitting a claim via Revenue Online Service (ROS) under the Electronic VAT Refund (EVR) system. Ask your accountant about this or look it up on the Revenue website - Revenue.ie.  With regard to your purchase of petrol, this can’t be reclaimed even when used for business purposes. Finally, the revenue and expenses figures in your accounts should be net of VAT if you are VAT registered and able to reclaim the VAT.



  • Registered Users Posts: 3,849 ✭✭✭condra


    Gloomtastic, sorry I didn't reply sooner. Thanks for going to the trouble to do that, and for sharing the response here. Very helpful and most appreciated.



  • Registered Users Posts: 8,291 ✭✭✭Gloomtastic!


    That’s perfectly ok.

    They still haven’t replied to my query about vehicle decals/advertising. Makes you wonder……😋



  • Registered Users Posts: 8,291 ✭✭✭Gloomtastic!


    @walterking @Allinall

    Still no reply from Revenue. It could be that I’m entirely right about claiming 100% of vehicle expenses if the same vehicle is advertising your services all the tIme. Where do we go next?



  • Registered Users Posts: 6,521 ✭✭✭Allinall


    If you’re dropping the kids to school, there is no added expense incurred in advertising your business, other than the cost of the decals, which has already been claimed.

    If you go out driving around with the sole purpose of advertising your business, then 100% of the expenses incurred would be claimable.

    Wholly and exclusively is the test.



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