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VAT ADVICE NEEDED

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  • 04-04-2012 10:23pm
    #1
    lucan1234
    Closed Accounts Posts: 3 ✭


    I’m hoping somebody can help me!!
    I have a retail business and its doing Ok considering the times we’re in and I was thinking of opening another store later this year.
    My wife is currently at home with no job but is not calming any social welfare.
    If I was to set it up in my name I would pay vat on everything.
    What I’m trying to find out, Is it possible for my wife to set the new store separate to the current one (same service, trading name and just a different location) as I don’t think it would reach the threshold for paying vat by the end of the year?

    Any advise welcome-thanks


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    #2
    barneystinson
    Registered Users Posts: 4,683 ✭✭✭barneystinson


    lucan1234 wrote: »
    I’m hoping somebody can help me!!
    I have a retail business and its doing Ok considering the times we’re in and I was thinking of opening another store later this year.
    My wife is currently at home with no job but is not calming any social welfare.
    If I was to set it up in my name I would pay vat on everything.
    What I’m trying to find out, Is it possible for my wife to set the new store separate to the current one (same service, trading name and just a different location) as I don’t think it would reach the threshold for paying vat by the end of the year?

    Any advise welcome-thanks


    What makes you think being VAT registered would necessarily be a negative?


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    #3
    lucan1234
    Closed Accounts Posts: 3 ✭lucan1234


    Thanks for the reply.
    She would still register for vat, but in the few months that the store would be open between now and the end of the year the figures won’t hit the vat threshold. If I opened it as another branch, the revenue would be in my registered name then I would pay vat on the revenue generated at 23%.

    I might be barking up the wrong tree here altogether but I’m just looking for advice


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    #4
    smeharg
    Registered Users Posts: 300 ✭✭smeharg


    There are 2 things:

    1. You're obliged to register for VAT when you are likely to exceed the threshold within the next 12 months, not when you actually exceed the threshold. The 12 month period has no connection with the calendar, tax or accounting year.

    2. Revenue can deem connected persons to be treated as one for VAT purposes.


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    #5
    dbran
    Registered Users Posts: 2,094 ✭✭✭dbran


    smeharg wrote: »
    Revenue can deem connected persons to be treated as one for VAT purposes.

    Yes. I believe it is section 8(3)(e) VATA72 :D


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    #6
    rainbowdash
    Closed Accounts Posts: 878 ✭✭✭rainbowdash


    dbran wrote: »
    Yes. I believe it is section 8(3)(e) VATA72 :D

    Advice I got was slighty different to OP. if the wife opens a business in her name then she does not have to register for vat (unless it's over the threshold) as long as its not the same line as the first business, which may be vat registered.

    What you need to watch out for is that the vat business does not be seen to be claiming the vat back on the non vat business, claiming back all the VAT on phones for example, when some of it is obviously for the non VAT business.


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    #7
    fasttalkerchat
    Registered Users Posts: 5,652 ✭✭✭fasttalkerchat


    I think your wife could open her own "sister" company.
    It would need to be registered separately but you could order stock together and stare staff etc. (as long as employment contracts allow it)


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    #8
    smeharg
    Registered Users Posts: 300 ✭✭smeharg


    rainbowdash wrote: »
    dbran wrote: »
    Yes. I believe it is section 8(3)(e) VATA72 :D

    Advice I got was slighty different to OP. if the wife opens a business in her name then she does not have to register for vat (unless it's over the threshold) as long as its not the same line as the first business, which may be vat registered.

    What you need to watch out for is that the vat business does not be seen to be claiming the vat back on the non vat business, claiming back all the VAT on phones for example, when some of it is obviously for the non VAT business.

    If it's a totally different kind of business then you should be ok. But OP is talking about opening another outlet doing the same thing - that's where the difficulty is.


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    #9
    TheCostumeShop.ie: Ronan
    Company Representative Posts: 1,740 ✭✭✭TheCostumeShop.ie: Ronan


    Seems like a false economy, Not being registered for VAT would mean all the fixed cost expenses of setting up a business - Shop fittings, Outsourced Labour, Cash Machines, Rent, Initial Product buying etc. Would all charge your wife VAT which she couldn't claim back at a time when cash is at a premium and expenses out are bigger than income. So net effect you loose more than you save at the start.

    Then when she starts making enough to barely break even she'd be required to register for VAT.


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