We have outlined below just some of the ways of effective VAT management.
Firstly I would like to outline when it is actually necessary to register for VAT.
A taxable person is any person who independently carries out any business in the State and is required to register for VAT when their turnover from the supply of taxable goods and services in a period of 12 months exceeds or is likely to exceed the following limits.
€75,000 - where at least 90% of turnover derives from the sale of goods
€37,500 - Other supplies of goods and/or services
€41,000 – Acquisition of goods from within the EU
€35,000 – Foreign mail order business
VAT is normally accounted for on the invoice basis, i.e. VAT is payable on the total sales invoiced in the relevant period regardless of whether or not the trader has been paid for the supply in that period. However, certain traders can opt for the moneys received (cash) basis of accounting. Under these circumstances the trader is not required to account for VAT until payment for the supply is actually received. However certain conditions have to be satisfied
- 90% of your turnover must be derived from taxable sales to unregistered persons.
- You must also satisfy Revenue that your total taxable sales which you expect to receive has not exceeded and is not likely to exceed €1,000,000 in any continuous period of 12 months.
All supplier invoices should be entered into the ‘Accounts Payable System’ as promptly as possible, to allow early recovery of VAT charged.
Ensure VAT is claimed on receipt of purchase invoices and is not delayed until payment is made.
VAT Return Management
Proper management of VAT returns to maximize cash flow savings e.g. submission of VAT returns prior to 19th of the month where a VAT refund exists, and following up with Revenue to obtain a refund.
Invoicing
For continuous supplies of services the supplier should consider issuing a pro-forma invoice/request for payment. This does not create a tax point therefore delaying when VAT is paid. When payment is received a VAT invoice can be issued.
Other VAT Administration Points
Review VAT rates – are you charging too much VAT.
Check suppliers’ VAT rate and ensure that their invoices have been created with the correct rate.
There other ways of delaying the tax point of an invoice, pro-forma fee notes and claiming VAT on purchase invoices after you have filed your relevant VAT return. Please contact us if you have any queries in this regard.
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