Tax issue

voodoo

I dont know why you closed my thread, becuase if you had looked at it, I had genuinely asked what to do! I know that the other way was fraudulent and that is why I had asked if there was any other way of working the tax. The first response to me did answer my question in that it said that I could reclaim the VAT. As far as I am concerned, my question was adequate.

I thought your comments were rude. I was only asking for advice. Thanks to those who were good enough to give "good" advice.

dahamsta

Does seem a bit harsh to lock it 80p, you could have just ticked him off and explained the situation. Besides:

What your friend did was illegal by using (I suspect) a registered VAT number of a company fraudulently.

What's fraudulent about it? If you want a computer, I'll gladly buy one for you in the UK and sell it to you at cost, but I'll take a hit on my VAT if I do. It's not illegal, it's just stupid.

adam

b20uvkft6m5xwg

Voodoo,
Can you explain in what way was I "rude" in my post on the closed thread. It was short and to the point.

What you are trying to do is defraud the revenue. I answered your question-

Adam,
Its fraudulent, because that VAT emempetion is for trading purposes- in this case you are not buying goods for resale, you are buying goods for a mate to EVADE tax.

In terms of the topic itself, if I let tax evasion be discussed then the "slippy slope" potentially begins. There's nothing personal involved Voodoo and if you have problems PM or mail me:)

dahamsta

Its fraudulent, because that VAT emempetion is for trading purposes- in this case you are not buying goods for resale

80p, seriously now, think about what you're saying: If I buy a computer for a mate and sell it back to him at cost, that /is/ resale. It's trading, and I can run my entire business that way if I choose. In fact, except in certain circumstances, I can sell /below/ cost if I wish. It may be stupid, but it's not fraudulent.

you are buying goods for a mate to EVADE tax.

It's only tax evasion if I don't declare it.

Perhaps the chap in question here /did/ evade tax, and that would be wrong, but your arguments against my example are wrong.

In terms of the topic itself, if I let tax evasion be discussed then the "slippy slope" potentially begins. There's nothing personal involved Voodoo and if you have problems PM or mail me:)

I'm sorry 80p, but like I said, I think closing the topic was a bit harsh. Whatever happened to warnings?

adam

b20uvkft6m5xwg

Originally posted by dahamsta
like I said, I think closing the topic was a bit harsh. Whatever happened to warnings?

adam

As I said Adam, there's nothing personal- ie. that a warning may more appropriate- it was based purely on the subject matter. One simply has to draw the line somewhere, as it is illegal.

I hope Voodoo understands this and continues to be a contributor to our community.

dahamsta

Look, just lock the thread again, you barbaric, fascist hustler you!

heh

adam

b20uvkft6m5xwg

Hustler eh!!

Can I be your pimp!??:p

yankinlk

Originally posted by dahamsta


80p, seriously now, think about what you're saying: If I buy a computer for a mate and sell it back to him at cost, that /is/ resale. It's trading, and I can run my entire business that way if I choose. In fact, except in certain circumstances, I can sell /below/ cost if I wish. It may be stupid, but it's not fraudulent.

I think you will find that you are wrong. It doesnt matter where the product came from. if you use your business to sell something to a friend/or anyone else without paying VAT to ireland then you ARE breaking the law. you cannot run a business by buying goods with your vat number and then selling them to the public for cash...that cash will have to be declared some way back into the companies coffers somehow.

mod was right to close the subject, if the guy knew HOW to do it, he wouldnt be here looking for advice on how TO do it - he would have a friend/relative in the business who could do it for him.

jeez, the subject itself was worthy of a lock

sceptre

I suppose if you look at it from a sensible POV:

If a friend buys a PC for me using his VAT number (whether he claims the VAT back at source or later) and then sells it on to me immediately, I'm the end-user and VAT legally has to be paid on it.

My tax knowledge is a bit shoddy (particularly for someone with a corporate tax exam in seven days:D) but the Revenue would take a dim view of the practice. Unless the VAT was paid.

Not a judgement call obviously - these things are not necessarily for discussion on a public board where many individuals are quite open about who they really are.

dahamsta

if you use your business to sell something to a friend/or anyone else without paying VAT to ireland then you ARE breaking the law.

Who said anything about not paying the VAT? This is my point precisely: 80p phrased his rebuttal in such a way as to make it look like buying a computer for a friend was illegal. It's not -- /evading tax/ is illegal.

I can quite legally buy a computer from a wholesaler tomorrow. I can then sell that computer to my friend at any price I damn well please, I will only be breaking the law if I don't declare the VAT on the sale to my friend. I can give it to him for nothing if I wish, but the obvious thing to do would be to sell it to him at cost, /including/ the VAT I would have to pay to the Revenue in my next return. Which would still probably work out as a substantial saving to my friend. Which is the whole point.

So, does anyone want me to buy them a computer?

heh

adam

voodoo

80, who mentioned anything about Tax evasion? I asked a question about whether it was ok to do this as I didn't know that much about the UK tax system! I was looking for advice on whether there were any issues with doing it or whether it was in fact illegal. With this in mind, I was looking for advice. Not on how to evade tax, but whether the method used was legal or not.

My comment about you being rude referred to the fact that you obviously just wanted to close my thread without giving a constructive answer when I was only looking for some advice.

You can in fact close this thread too if you like now that I have gotten some good feedback from "interested" parties and those willing to give constructive advice.

yankinlk

subject = "Beating tax in the uk" that sounds like the same as evading m8

Chaos-Engine

Well as far as I see it it is legite.... You only have to declare VAT returns if your businesses(however shady) Total Revenue exceeds the £40,000(its € eqiviluent) annually. You don't even have to register for VAT returns until you reach that level of sells...

Its TAX AVOIDANCE not Evasion...
Its Legal but not right

Hellrazer

I often use my fathers company`s vat number to buy stuff(mainly PC) abroad.
I get the invoice made out to the company and he can legitimately claim the VAT back.I also use it if I see a deal over here.Again he puts the invoice through the company and I pay him the amount minus the Vat.The same can be done if I buy stuff for a friend.I order what I want with the Vat number,pay from the companies coffers and sell it on without doing an invoice for the transaction,the money that I receive goes back into the companies funds and shows up as a purchase for the companies own use ie.new Pc for office.No one is any wiser to the fact that it was sold on to someone else.
Im not sure of the legal status of doing this but there has been no problems as of yet.
Its not Tax evation as the revenue are still seeing an invoivce made out to said VAT-registered company and this satisfies their inspectors.
It may be stupid to sell the stuff minus the VAT at the time of purchase but at the end of the Tax year the VAT is refunded and the company is no worse off in the long run.

The_Conductor

The company is no worse off in the long run, providing they are not audited, and made account for all this equipment which has apparently slipped out the back door. In that case they face fines and possibly prison sentences or disbarment for the companies directors. Along with tax evasion, it could be argued that the proprietor of the business was engaging in "reckless trading", a nice new crime.
Whether you like it or not, unless you are using the equipment in the business, selling it onwards having reclaimed the VAT, regardless of at what stage the VAT was refunded/not paid, is illegal- unless you charge VAT to the end user, and forward the relevant dues to the Revenue Commisioners.
To the wise guy advocating keeping below 40,000- thats the sum below which it is not legally necessary to register for VAT. This does not mean you are not legally supposed to pay your VAT (and indeed your other tax liabilities) in a lawful manner, like most of the rest of the population.

Moderator- can we kill this thread again?

DJB

There seems to be a clear mis understanding flying throughout this thread. What I think VOODOO was saying first was:

I think this is tax evasion (which is illegal) but can you do it using tax avoidance (which is legal).

Tax evasion is where you don't pay or declare taxes you should have. Tax avoidance is where you are not liable to pay or declare taxes for certain items. There are companies and accountants out there that get paid a **** load of money because they study the system, find the loop holes and tell their clients. Their clients act on their advice and save a load of money through TAX AVOIDANCE.

In regard to your question:

If I purchase a computer into my company from the UK and supply my IE vat number, I do not have to pay the UK company VAT on the import. E.G. I pay €1000 for a computer that I should pay €1175 for if I was registered in the UK. So I have saved €175 so far. Now, I want to sell on that computer to a friend. If I sell it for €1000 (which is what I bought it for), I declare it whatever way I want. Now the revenue will say that I took in €1000 for a sale which included vat at 21 %. I now have to decalare that 21% to the revenue.

I get to keep €826 from the sale and pay the revenue €174. I paid out €1000 already and now another €174 so in total I paid out €1174. I only took in €1000. So as a company I lose €174. My friend might save money but I took the hit on the vat. As dahamsta said "it's just stupid".

A way I can get out of losing money and still not paying VAT is by selling the computer to my friend for €1000 CASH. I declare the sale as something else or not in my books at all. The computer will show up in my books as a Fixed Asset and when audited (as all companies are), they may ask to see this fixed asset of a computer. At that time I would have to present the computer that may be in use at a home office, etc. and my friend better still have the computer!! or I would be FCUKED!! So, your going to get caught somewhere on the system. Either by not declaring a sale of a fixed asset, or by not charging enough for the sale.

*** THAT WAS ALL AN EXAMPLE /\

To AVOID (not evade) tax you could have the computer purchased by your friend with a company. Have him declare it as a fixed asset in his company as a home-office pc. You use it in your home for the period of one year or until the end of the tax year. Given the life expectancy of a computer, I think depreciation is written off at about 20-25% but I am not sure. The value of the computer will reduce to about €800 and he sells it to you for about €800 + VAT. He pays the revenue the VAT, declares the €800 as a sale of a fixed asset and the other €200 depreciated - he writes off against his end of year tax liability. That's legal as the company still owns the asset until they sell it to you at a later date and can take it back at anytime they want. You just better buy it in a years time!!

Sorry for rambling on but couldn't resist it.

Here is a two line solution instead of the one above:

Set yourself up as a sole trader registered for VAT and purchase it using your own VAT number!!


Hope that helps and doesn't screw things up even more!

Regards,

Dave

The_Conductor

Very good explanation Dave.
Hope thats cleared it up for once and for all.

voodoo

Guys (especially DJB), thanks for the help on this. It's totally cleared things up for me.

Cheers,

Voodoo

lynchie

DJB,

A quick question to you since you seem to know a lot about this sort of thing.

If I am currently registered as a sole trader, Can I just apply to be registerd for VAT?

If so, can I buy all my computer equipment and accessories and claim the VAT back on them?

Do you actually have to have some revenue coming in before you can claim VAT back, i.e. could I just set up a company (with its address as my home address), register for VAT and claim it back on computer equipment and not do a single bit of business all year long but still get the VAT back on my computer etc if I say they are fixed assets?

The_Conductor

If you register a company you are supposed to submit an annual company tax return, auditted for the particular time frame. In the past you could go for years before they actually took any action over your failure to make these returns, but they have become a lot more vigilant in the last year or two.
If you were selectively auditted and unable to prove that the assets in question were for use in the business you probably would be served with a large demand (the penalties are actually worse than the back tax) by the revenue commisioners. In addition you can be barred from holding a company officer position.

DJB

You could do that but a company can only stay a company if it is being kept on as 'A GOING CONCERN'. If it is not been kept as a going concern then it won't be allowed to continue to trade. If the only reason you set a company up is to but stuff and claim back VAT - that won't work and you will get done for it.

Follow what smccarrick said.

If you are a sole trader and are not sure about registering for VAT. Here is a quick guide.

You should get a copy of the STR form from http://www.basis.ie. It's the TR2 form for companies. Under the VAT section you should only register your company if:

1. You wish to elect to be a taxable person although not obliged to by law.

2. Turnover exceeds or is likely to exceed €50,790 in any 12 month period.

If you are a trading company or sole trader you can register for VAT at any time you want and start claiming VAT on purchases but you will have to charge VAT on all your sales.

Regards,


Dave