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Unregister from VAT?

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  • 24-10-2012 11:55am
    #1
    Trine
    Registered Users Posts: 191 ✭✭


    About a year ago I registered with VAT as a sole trader. A big reason was to buy the startup equipment I needed for my business at ex-VAT rate, as I had a very tight budget.

    Business has been damn slow, and I'm only bringing in around 200-300 a week, and that's before paying VAT. I don't see this increasing very much in the near future. I have bought all the equipment I need, and do not have many business related overheads which I am claiming back on.

    I would be considered a service, and I see that the threshold for such is 37,500, which I am nowhere near.

    Should I stay registered with VAT? Or would I be better off unregistering?

    What taxes would I still need to pay if I were to do so? Can I continue my business as normal?

    And would I need to pay back the VAT I claimed on the initial startup equipment?

    Thanks.


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    #2
    nompere
    Registered Users Posts: 1,678 ✭✭✭nompere


    From www.revenue.ie

    Under the general cancellation of registration rule, the trader pays to
    Revenue any excess of VAT refunded to him or her over the tax paid for
    the taxable periods that the election had effect, or 3 years prior to the date
    of application for cancellation, whichever is the lesser.

    So yes; you will have to repay the net VAT that Revenue have paid to you.

    If your customers are registered for VAT you are probably better off sticking with the registration - at least until you are out of the repayment rules. If your customers are unregistered then you'll have to do the sums carefully. Your price is likely to be lower than your competitors, but there's that VAT repayment problem ...

    Income/corporation taxes will probably be unaffected by a change in your VAT status.


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