# Re-claiming VAT



## onway (9 Dec 2010)

My husband was working in construction for many years and was VAT registered.He has not had any work for the past 2 years but did not de-register.
1.Can he claim back VAT on his mobile phone bills etc for this period , even thought he was not charging VAT as he had no work. ??

Also, he will now be charging and reclaiming VAT again as he has some computer work in hand so we were wondering if there is a list of things on which he can claim back VAT as he hoping to start doing his own VAT returns. Thank you..


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## T McGibney (10 Dec 2010)

onway said:


> 1.Can he claim back VAT on his mobile phone bills etc for this period , even thought he was not charging VAT as he had no work. ??



If the mobile phone wasn't used for business purposes during that period, he can't reclaim the VAT.



onway said:


> Also, he will now be charging and reclaiming VAT again as he has some  computer work in hand so we were wondering if there is a list of things  on which he can claim back VAT as he hoping to start doing his own VAT  returns. Thank you..



Has he considered de-registering until and unless his annual turnover from the new activity reaches the registration threshold?


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## onway (10 Dec 2010)

Most of the work he is doing now involves businesses which are VAT registered and so they want to reclaim the VAT.


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## T McGibney (10 Dec 2010)

That's grand - but he should still consider the pros and cons of de-registering, particularly if part of his turnover is likely to be to non-VAT registered individuals or businesses.


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## onway (10 Dec 2010)

Would he be at a disadvantage is he de-registered and he was working for a company that could claim VAT back


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## mandelbrot (11 Dec 2010)

onway said:


> Would he be at a disadvantage is he de-registered and he was working for a company that could claim VAT back



No. The reason being as follows:

If he is VAT registered he invoices the customer, (say) €100 + 21% VAT = €121. The customer then reclaims the €21 of VAT from Revenue.

If he is not registered, he just charges the customer €100. End of story.

In either scenario the ultimate cost to the customer is €100.

So, VAT is only a cost to a person who isn't VAT registered, as they cannot recover the VAT they are charged. This is also true of your husband; he cannot reclaim the VAT on any of his overheads, such as phone bills, diesel, materials etc. if he goes unregistered.

The decision whether to go unregistered or not, then depends on whether he is likely to be carrying out work primarily for VAT registered businesses or private individuals. If he is going to be doing mainly private work, then he will effectively be 13.5% / 21% more expensive (depending on which rate of VAT he is required to charge).


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## onway (13 Dec 2010)

How do you go about de-registering...?????


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## JoeB (14 Dec 2010)

mandelbrot said:


> If he is going to be doing mainly private work, then he will effectively be 13.5% / 21% more expensive (depending on which rate of VAT he is required to charge).




But he wouldn't be able to claim VAT back on his own expenses, and so everything costs him more, so he'll no longer be able to sell goods for 100 (if he previously sold for 100 + VAT)

For example, his bricks might have cost 1 Euro + VAT... if he claims back the VAT then the bricks cost him 1 Euro... if he doesn't claim back VAT then the bricks cost him 1.21.

So if not registered for VAT then his total prices will be more expensive than his ex VAT prices if he was VAT registered.


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## mandelbrot (14 Dec 2010)

JoeBallantin said:


> But he wouldn't be able to claim VAT back on his own expenses, and so everything costs him more, so he'll no longer be able to sell goods for 100 (if he previously sold for 100 + VAT)
> 
> For example, his bricks might have cost 1 Euro + VAT... if he claims back the VAT then the bricks cost him 1 Euro... if he doesn't claim back VAT then the bricks cost him 1.21.
> 
> So if not registered for VAT then his total prices will be more expensive than his ex VAT prices if he was VAT registered.



I did mention that also, in the previous paragraph Joe! _"This is also true of your husband; he cannot reclaim the VAT on any of  his overheads, such as phone bills, diesel, materials etc. if he goes  unregistered."

_But in general, his overheads will only be a percentage of his income (otherwise, whats the point!), so unless he is charging VAT at 13.5%, and has a fairly low gross margin and predominantly 21% rated inputs, he will still be in a better position staying unregistered for as long as possible...


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## onway (14 Dec 2010)

His work at the moment is mainly web based so he does not have any materials as such to claim back VAT on - in fact, the only thing we know of that he can claim for is his phone bills....would this be corrrect or are we missing something......


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## mandelbrot (14 Dec 2010)

onway said:


> His work at the moment is mainly web based so he does not have any materials as such to claim back VAT on - in fact, the only thing we know of that he can claim for is his phone bills....would this be corrrect or are we missing something......



If that's his only expense then that's it! But bear in mind he can't even have all of his phone bill, as only some of it will be business calls - unless of course it's a phone specifically for business.


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## onway (14 Dec 2010)

So does he just contact Revenue and ask to be de-registered.........apologies for all the stupid questions.....


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## mandelbrot (15 Dec 2010)

onway said:


> So does he just contact Revenue and ask to be de-registered.........apologies for all the stupid questions.....



Yes, call your local district office, tell them he wants to deregister and why, and they'll take care of it.


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## T McGibney (15 Dec 2010)

mandelbrot said:


> Yes, call your local district office, tell them he wants to deregister and why, and they'll take care of it.




This is no longer the case. Form TRCN1 is now to be used to apply for tax deregistration.


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## JoeB (15 Dec 2010)

De-registering can be a problem in some cases. Revenue may seek to reclaim some of the previous VAT claimed back. So you could be hit with a VAT bill.


I'm not sure how this works, but it has been mentioned in other threads about de-registering. It'd be worth checking out in more detail.. it may not affect the OP.

(Clearly the VAT which has already been claimed back on stock, which hasn't been sold yet, would be taken back by Revenue on de-registering,.. one can't expect to be able to sell the stock with no VAT, even though you claimed the VAT back already!)





@Mandelbrot
Yes, I agree with you.. it's just the example you gave is slightly misleading.

If he previously sold for 100 plus VAT, he would now sell as a de-registered person for perhaps 105 to 110 in total... he'd have to charge more than his previous ex VAT price as he cannot claim back the VAT on his input materials.


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## onway (8 Jan 2011)

Just want to ask a follow-up question here - My husband's next VAT return is due on Jan 19th and he has some VAT to pay and then he intends to de-register as his income is not near the threshold for VAT.He is now buying a new laptop for work and we don't know whether to claim back the VAT on that in this last return or if Revenue would have a problem with this.....What do ye think??


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## mandelbrot (8 Jan 2011)

As long as he can show that the laptop is for business purposes, and was purchased while he was still VAT registered, I don't see why it would be a problem.


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## onway (8 Jan 2011)

Was just afraid that if he bought it and claimed the VAT back and then de-registered , we would bring the wrath of Revenue down on us.....


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