VAT loophole

wallycool

I own a company and am registered for VAT ie I can claim back VAT on invoices. Hypothetically speaking, if i bought
a toyota landcruiser (30020euro+7980euroVAT) and claimed back the VAT at 21% and in one year resell the Landcruiser to a family member/friend at a knock down rate (3950euro+1050euroVAT).
Then in year two your family member/friend resells the landcrusier for the proper depreciated value of -4000 per year (getting 30000euro).
So therefore you have technically had a new landcruiser for 2 years and it has only cost you 1050euro ie the VAT paid back to the government on the resale of the Landcruiser to the family member/friend.
Could you please help me out and tell me if this would work.

Tails142

family member would be supposed to pay tax on the profits of the sale

jimmycrackcorm

OP would be screwed in a Revenue Audit as you couldn't depreciate it by that much in one year.

tippbhoy

not a consumer issue.

you couldn't apply that depreciation rate over 1 year, even if you could apply a generous rate e.g. 50% you would need to aply it to everything else in your company across the board as a standard rule so your company's assets would be virtually worthless on your books.

dimple

You can't reclaim VAT on passenger motor vehicles (assuming your business doesn't consist of selling cars/hiring cars or is a driving school)
http://www.revenue.ie/index.htm?/leaflets/vatguide_chapt6.htm

So you will fall at the first hurdle while attempting to evade tax.

Did you not like the sound of the answers you already got here? -
http://www.boards.ie/vbulletin/showthread.php?t=2055221060

cgarvey

wallycool wrote: »

Could you please help me out and tell me if this would work.

It won't (depreciation rates are fixed/pre-determined, you'd have to charge VAT on the resale, you'd have to demonstrate 'for company use' on the purchase during an audit). Just pay your taxes like the majority of us.

gerrycollins

good luck trying that one your VAT returns would shine like beacon in the Revenue offices.

dudara

Thread closed - already posted in Accounting.

dudara