# Should I Register for VAT



## MJ85 (7 Oct 2010)

I have just formed a company and started a sales business - (buying product and reselling) The Business is an e-commerce based and I have only made a few sales to date but hope to be eventually - within 12months or so - coming up towards or even exceeding the threshold of ~75K / annum.

What are the pros or cons for registering for VAT now? Are there any extra costs Landed on me for VAT registering, but not reaching the 75K within 12 months?

Or

Is it more advisable to leave VAT registration until after the threshold is reached


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## dahamsta (7 Oct 2010)

The only factor apart from the cost of your time is whether or not your clients will need VAT receipts. After that it depends on your certainty of reaching the threshold. If you're fairly certain, it's as easy to go ahead and do it and get into a routine of doing your returns. If it's only a possibility, it might be more trouble than it's worth. Just make sure you're financially covered if you do have to register at the end of the year.


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## dereko1969 (7 Oct 2010)

Are your customers going to be, in the main, VAT registered or not is the main question? If they are then by registering you can reclaim the VAT on your costs, if not it's an additional unclaimable cost for your customers.


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## MJ85 (7 Oct 2010)

Products are sold through a website direct to end users. Also sales only will occur through the website and through either Paypal or direct with credit card.

Would I be correct in saying, that only on a rare occasion would a customer require to reclaim the VAT on a purchase and because the I may not reach the threshold to hold tough and not VAT register?


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## mathepac (8 Oct 2010)

MJ85 said:


> ... Would I be correct in saying, that only on a rare occasion would a customer require to reclaim the VAT on a purchase and because the I may not reach the threshold to hold tough and not VAT register?


Reclaim what VAT? If you are not registered you cannot charge your customers VAT, nor can you issue them a valid VAT invoice to use in a reclaim.


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## dereko1969 (8 Oct 2010)

i'll state it again are your customers likely in the main to be businesses or individuals (ie VAT registered or not)?


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## MJ85 (10 Oct 2010)

dereko1969
End Users / Individuals
Now I have the the transport company onto me looking for my VAT registration number


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## allthedoyles (11 Oct 2010)

MJ85 said:


> dereko1969
> End Users / Individuals
> Now I have the the transport company onto me looking for my VAT registration number


 
You are not registered for VAT , so you cannot give the transport co. a number. - 

Register with them as an individual - not a business .


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## MJ85 (19 Oct 2010)

The Main question is what is con in registering for VAT?
Am I charged anything extra for being registered and below the E75,000 threshold?


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## Mrs Vimes (19 Oct 2010)

The "con" in registering for VAT is that you have to charge VAT to your customers (the pro is that you can reclaim VAT paid to your suppliers).

If your customers are primarily not VAT registered then they will be unable to reclaim the VAT you charge them.

For example, if you are selling them widgets for e100 and you are VAT registered then you will have to pay over the VAT element of each sale to Revenue (ie you keep e82.64 and Revenue get the other e17.36)

If you are not registered for VAT then you keep the whole e100.

If your customers are generally registered for VAT then they can reclaim the VAT element, total cost to them is e82.64. If they are not registered for VAT then total cost to them is e100.

There is no difficulty in being registered for VAT and not reaching the threshhold for compulsory registration.


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## MJ85 (19 Oct 2010)

Am I correct in assuming
If I sell a product for 150.00ex (181.50inc) which includes transport
Total Vat In 31.50

Actual Transport costs 10.00ex (12.10inc)
Product costs 100.00ex (121.00inc)
Total VAT out 23.1 (VAT difference owed -8.40)

VAT registered - 150.00-(100.00+10)=50.00+(-8.40)=31.60 to me
Not VAT registered - 181.50-(121.00+12.10)=48.40 to me 

Either I am missing some charge for non VAT registration OR  there is another benefit to being VAT registered


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## BazFitz (19 Oct 2010)

You should speak with an accountant.  You seem to be fumbling around in the dark in relation to what are serious matters.


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## MJ85 (19 Oct 2010)

I will speak with an accountant - 
I didn't think it was as complicated as it is - I probably should have spoken with an accountant first day and skipped this posting as it has only wasted time for me. Maybe I can save the next person some time by leaving a post explaining MY EXAMPLE once I find out.


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## BazFitz (19 Oct 2010)

MJ85 said:


> I will speak with an accountant -
> I didn't think it was a complicated as it is - I probably should have spoke with an accountant first day and skipped this posting as it has only wasted time for me. Maybe I can save the next person some time by leaving a post explaining MY EXAMPLE once I find out.


 
You're not just looking for a high level steer in relation to a hypothetical situation.  You're actually trading despite the fact that you don't seem to have a clue about your obligations from a tax perspective.  That means you're either defrauding the State or shooting yourself in the foot through a combination of incompetence and frugality.  Bite the bullet and speak with an accountant.

My advice to "the next person" would be to speak with an accountant when setting up a new business.  By all means use a resource such as AAM as a sounding board but always be mindful that there's no substitute for good professional advice.


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## MJ85 (19 Oct 2010)

> You're not just looking for a high level steer in relation to a hypothetical situation.


I would have accepted a low level hypothetical steer. But instead I get abused and labelled as being incompetent for asking a question? I hope you are not in the education profession.



> By all means use a resource such as AAM as a sounding board but always be mindful that there's no substitute for good professional advice.


So it is agreed, A A M on this occasion was a complete waste of my time as I should have gone straight to the professional advice.


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## papervalue (19 Oct 2010)

MJ85 said:


> I have just formed a company and started a sales business - (buying product and reselling) The Business is an e-commerce based and I have only made a few sales to date but hope to be eventually - within 12months or so - coming up towards or even exceeding the threshold of ~75K / annum.
> 
> What are the pros or cons for registering for VAT now? Are there any extra costs Landed on me for VAT registering, but not reaching the 75K within 12 months?
> 
> ...


 
No great dis-adv waiting till you reach threshold

In a case like yours a reason a person might register early is if they had to buy equiptmemt to use in business such as computer lease/hp on van etc once vat registered the can relaim vat on purchase but if not registered cant get back the vat

Their is a Vat guide on revenue website which is worth a read.

The admin in vat keeping is a bit more time consuming


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## dereko1969 (19 Oct 2010)

MJ85 said:


> I would have accepted a low level hypothetical steer. But instead I get abused and labelled as being incompetent for asking a question? I hope you are not in the education profession.
> 
> 
> So it is agreed, A A M on this occasion was a complete waste of my time as I should have gone straight to the professional advice.


 
you were given a steer, your problem is you don't seem to understand anything about the answers that were given - that is your problem not the people giving advice.

if you are only now researching your tax obligations NOW having already started your business then I would think your business will fail - but of course that will be all the fault of AAM.


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## BazFitz (19 Oct 2010)

MJ85 said:


> I would have accepted a low level hypothetical steer. But instead I get abused and labelled as being incompetent for asking a question? I hope you are not in the education profession.
> 
> 
> So it is agreed, A A M on this occasion was a complete waste of my time as I should have gone straight to the professional advice.


 
I didn't label you as being incompetent for asking a question.

I pointed out that you've already commenced trading and instead of seeking professional advice regarding your tax obligations, you've chosen to fish for advice on AAM.  In the meantime, you're either underpaying the relevant taxes, or not claiming what you're entitled to.  This situation arises as a result of either your own incompetence or your own frugality (i.e. you're unwilling to pay for the necessary advice).  Right now, you are either operating in the black economy and defrauding us all, or you're killing your business before it's started by not organising your affairs correctly (e.g. by claiming VAT input credits).  What's your plan for dealing with Revenue when they knock on your door - Tell them that you got sign off on AAM?


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## MJ85 (19 Oct 2010)

dereko1969 said:


> you were given a steer, your problem is you don't seem to understand anything about the answers that were given - that is your problem not the people giving advice.
> 
> if you are only now researching your tax obligations NOW having already started your business then I would think your business will fail - but of course that will be all the fault of AAM.



was given a steer?
cannot understand answers I was given?
blaming AAM?

Thanks for insight


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## MJ85 (19 Oct 2010)

BazFitz said:


> In the meantime, you're either underpaying the relevant taxes, or not claiming what you're entitled to.
> 
> you're killing your business before it's started by not organising your affairs correctly (e.g. by claiming VAT input credits).



Useful part

Th4nk U


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## MJ85 (19 Oct 2010)

Thanks Papervalue

I found the following guides particularly useful:

IT48 - Starting a Business - A Revenue Guide
IT49 - VAT for small business
Code of Practice for determining Employment or Self Employment Status of Individuals


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## MJ85 (28 Oct 2010)

Turns out for this business it is better not to register for VAT as
The majority of my customers are not VAT registered - B to C (Business to Customer)


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