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Sole Trader/VAT query

  • 10-04-2014 01:48PM
    #1
    Flimbos
    Registered Users, Registered Users 2 Posts: 642 ✭✭✭


    I've a couple of quick questions on taxation as a sole trader. I've had a good look through the forum and Revenue site, but can't find the exact answers. Thanks.

    1) If I'm a sole trader, not registered for VAT, and I make a purchase or incur an expense - say for €123. The invoice will state €100, plus €23 VAT. Do I include the whole amount as allowable expense, or just the ex-VAT €100?

    2) Do I need to request invoices for every expense, which specify the VAT amount? If a receipt (with no breakdown of VAT) is all that is available, can I claim this expense?


Comments

  • #2
    Citizenpain
    Registered Users, Registered Users 2, Paid Member Posts: 2,114 ✭✭✭Citizenpain


    Flimbos wrote: »
    I've a couple of quick questions on taxation as a sole trader. I've had a good look through the forum and Revenue site, but can't find the exact answers. Thanks.

    1) If I'm a sole trader, not registered for VAT, and I make a purchase or incur an expense - say for €123. The invoice will state €100, plus €23 VAT. Do I include the whole amount as allowable expense, or just the ex-VAT €100? whole amount is allowable

    2) Do I need to request invoices for every expense, which specify the VAT amount? If a receipt (with no breakdown of VAT) is all that is available, can I claim this expense? receipt is fine


    As long as you are not required to register for VAT.....


  • #3
    Mr. Incognito
    Registered Users, Registered Users 2 Posts: 9,798 ✭✭✭Mr. Incognito


    http://www.revenue.ie/en/tax/vat/guide/vat-deductible.html

    Point 4 of the above guide


  • #4
    Flimbos
    Registered Users, Registered Users 2 Posts: 642 ✭✭✭Flimbos


    Thanks for the replies.

    So, if I understand correctly - if I were VAT registered, my income and expenses used in calculating my taxable profits are the amounts exclusive of VAT.

    However, as I am not VAT registered (and not required to be), the VAT inclusive amounts are used.

    Eg. For an expense of €123 (comprising €100 + €23 VAT), the whole €123 can be deducted from my income to calculate my profit.


  • #5
    GusherING
    Registered Users, Registered Users 2, Paid Member Posts: 361 ✭✭GusherING


    Flimbos wrote: »
    Thanks for the replies.

    So, if I understand correctly - if I were VAT registered, my income and expenses used in calculating my taxable profits are the amounts exclusive of VAT.

    However, as I am not VAT registered (and not required to be), the VAT inclusive amounts are used.

    Eg. For an expense of €123 (comprising €100 + €23 VAT), the whole €123 can be deducted from my income to calculate my profit.

    You are not registered for VAT, so you have already paid the 23e to someone else who in turn is responsible for passing it to Revenue. Therefore you do not pay it twice.

    If you were registered for VAT and were trying to calculate your VAT bill to revenue, you may deduct any VAT that you might have paid out on your business expenses against any VAT you have taken in from customers who are not registered for VAT.


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