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VAT - and well, basically not paying it

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  • 20-10-2007 12:12pm
    #1
    wicklah
    Registered Users Posts: 95 ✭✭


    Hi all,

    I've searched and I couldn't find anything about this.

    Has anyone investigated setting up a company to do either their self build or extension etc. I was hoping to do something similar and have the builders charge the company so that I can get the VAT back (or not pay it).

    Going to start investigating it myself but if anyone had any experience on the subject or thoughts and opinions I'd greatly appreciate it.


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    #2
    Victor
    Registered Users Posts: 78,400 ✭✭✭✭Victor


    Why would you want to do that? If your company gets VAT back on the materials it buys and subcontractors it employs, it then has to charge you VAT on the full cost (including labour). You lose out by the amount of VAT on the labour.


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    #3
    jimmycrackcorm
    Registered Users Posts: 14,339 ✭✭✭✭jimmycrackcorm


    What the Vat man giveth the corporate taxman eventually taketh.


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    #4
    godtabh
    Moderators, Science, Health & Environment Moderators Posts: 23,218 Mod ✭✭✭✭godtabh


    jimmycrackcorm wrote: »
    What the Vat man giveth the corporate taxman eventually taketh.

    If you make zero profit what happens?


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    #5
    SkepticOne
    Closed Accounts Posts: 6,718 ✭✭✭SkepticOne


    A company can only claim VAT back against VAT it has charged its own customers (i.e. you).


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    #6
    OTK
    Closed Accounts Posts: 556 ✭✭✭OTK


    If you set up a company to build you a house and register that company for VAT you will indeed be able to reclaim VAT on building materials and building services. The problem is that the company will own the house, not you. If you want to live in the house afterwards, you will need to pay rent to the company and you will need to pay VAT on the rent! You own the company but if you want to use the company's money you have to pay income tax when you take it out as pay.

    VAT on property is complicated in Ireland and you should seek advice before registering for VAT


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    #7
    Electric
    Registered Users Posts: 539 ✭✭✭Electric


    The other thing is setting up a company is quiet expensive and time consuming. You need to get your memorandum and articles sorted out (they say what the company can and cannot do) then you need your articles of incorporation. You need to get VAT clearance from the taxman so you can claim tax. And if you intend to do the work yourself then you need a C2 clearance.

    Oh and just to point out that this list isn't exhaustive. My Dad set up his own company about 5 years ago and all in all I think it cost about €1000 to do this.

    Then there is the issue of what you do with the company after you get the work done? It won't just cease to exist you'll still have to file annual returns, prepare accounts, pay your corporation tax, make VAT returns etc.

    If you wanted to just do the work and leave it at that then you would have to go through the winding up process.

    Believe me company law is very tricky and not to be messed around with lightly!!!!

    If I were you I would either shop around and get a cheaper quote for the work (hence paying less VAT) or do some of the work yourself!


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    #8
    jdivision
    Registered Users Posts: 4,260 ✭✭✭jdivision


    OTK wrote: »
    If you set up a company to build you a house and register that company for VAT you will indeed be able to reclaim VAT on building materials and building services. The problem is that the company will own the house, not you. If you want to live in the house afterwards, you will need to pay rent to the company and you will need to pay VAT on the rent! You own the company but if you want to use the company's money you have to pay income tax when you take it out as pay.

    VAT on property is complicated in Ireland and you should seek advice before registering for VAT

    To be honest I question whether the Revenue would allow him to live in it after it was done because it isn't an arms length transaction. That said Bernard McNamara's house is owned by a company and Denis O'Brien bought his place on Shrewsbury Road through a company. You also have to pay corporation tax on any profit you make it you sell it on. I think there is a thing whereby if you sign a long-term rental agreement on a development and are registered for Vat, after a certain amount of time you don't have to pay it. I seem to remember MKN Properties signing a long-term deal to let a scheme to Aer Lingus which in turn housed its employees and so on overnight there in order to take advantage of this. Not 100 per cent though.


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