VAT question

fds

Apologies if this is in the wrong forum, but I thought someone in here might have some experience with this. I have been trying to get through to Revenue all morning for an answer but there is no reply.

I am going to set up a small business as a sole trader and I need to buy a few expensive pieces of machinery to get started. If I register for VAT will I be able to claim back all of the VAT paid?

It is unlikely that I will reach the minimum required income levels this year so I would only register if it would allow me to claim the VAT back.

Does it work like that? Can you simply claim it back in one chunk or do you simply offset the VAT you have paid against VAT you collect from customers?

I hope this makes sense, thanks for reading!

Bullseye1

You can claim all vat on items to do with your business.

Bullseye1

But I wouldn't register until your established and have exceeded the threshold.

Big Lar

If your registered for vat and buy a machine that costs €1210.00 inc Vat for simplicity's sake then you are entitled to the VAT of 21% which in this case is €210.00 back, if you sell any services or products when you are registered for vat then you must collect the VAT (21%, 13.5% or the new 9% rate whichever is applicable) on behalf of the revenue and forward it to them.

This all happens on a two or four monthly basis.

fds wrote: »

Can you simply claim it back in one chunk or do you simply offset the VAT you have paid against VAT you collect from customers?

offset the VAT you have paid against VAT you collect from customers

fds

Bullseye1 wrote: »

But I wouldn't register until your established and have exceeded the threshold.

Thanks for that. The problem with waiting to register is that (according to the info on revenue.ie) I am unable to back date a claim for machinery. You must be registered at the time of purchase in order to be eligible to claim the VAT.

But so long as I can claim it back in full regardless of my income level that is fine.

fds

Big Lar wrote: »

offset the VAT you have paid against VAT you collect from customers

Ok so using you example, say I buy my machinery for €1210 but I only have sales for the year of €605 Inc VAT. Do I then only get to claim back €105 instead of the €210 I could be entitled to? Or, do I have an option of saying "please send me a cheque for €210, I will submit my customer's VAT to you as I get it"?

lakill Farm

Hi fds,

I would suggest to register now and to opt for the "cash receipt basis" and not the invoice. This will help with cashflow especially if its taking more than 30 days to get money out of your customers. I opted for this with my business and i would always suggest to my clients to go this route once turnover is under €1m

PM me if you require any more advice

fds

lakill Farm wrote: »

Hi fds,

I would suggest to register now and to opt for the "cash receipt basis" and not the invoice. This will help with cashflow especially if its taking more than 30 days to get money out of your customers. I opted for this with my business and i would always suggest to my clients to go this route once turnover is under €1m

PM me if you require any more advice

Great thanks.


I think I should really just sit down with an accountant for 20mins and make sure I am doing everything right.