VAT number questions

T

Trine

Registered User
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Hi all,

I plan to start a (very) small recording studio in Dublin later this year. At the moment I'm just trying to draw up a rough draft of costs between equipment, materials etc. It's proving difficult because I don't know where I stand in relation to VAT. So a few questions I'd really appreciate help with:


1. As the owner and only person employed at my future studio (self employed?), am I able to get a VAT number that will allow me to buy equipment for my studio ex-VAT?

2. If it is possible, what forms/costs are involved, and how long does the process take? Is it necessary to get an accountant to do it?

3. With a VAT number, do I simply quote the number at the time of purchase and pay the ex-VAT price, or do I claim back the VAT at some point during the year?

4. €37,500 is the turnover threshold for VAT registration (I think?). I won't be reaching this threshold for a few years as I am starting off very small. Even so, am I still able to voluntarily register for VAT to acquire a VAT number, and if so will I still have to charge VAT on all services even though I don't reach the threshold?


Thanks for reading. I realise I probably come across as clueless for somebody who is trying to start a small business, but I do plan on reading up beforehand! Just getting these few questions clear will help me a lot in the short-term.
 
Hi Trine

1. Yes you can get a VAT number irrespective of turnover level provided the service you offer is not VAT-exempt (which I'm fairly sure isn't the case). You just need to state on the tax registration form (see point 2 below) that you are electing to register for VAT

2. Form TR1 for a sole trader. Form TR2 for a limited company. Go to www.revenue.ie and serach for "Form TR1" and/or "Form TR2". There is no need to get an accountant to fill in the form for you. Anybody can do it.

3. You will have to complete a VAT return every 2 months initially where you pay the difference in VAT collected and VAT paid out over to Revenue.

eg - VAT on Sales for Jan/Feb 2010 = €1,000
VAT on Purchases for Jan/Feb 2010 = €600

VAT to pay to Revenue (before 19-Mar-2010) = €400

If the VAT on Purchases figure is greater than the VAT on Sales figure then you get a refund of VAT

4. Yes. However, if you decide to deregister for VAT and you have gotten net refunds (see point 3) then you will have to pay this VAT back to Revenue.

NB - you cannot claim back the VAT on non-business items and also some other business items even though VAT is charged on them. The most common are Petrol (although diesel is OK), Accomodation, & Food.
 
Another consideration when deciding whether or not to register for VAT, is that by not doing so you are essentially saying to your potential clients that my turnover is less than the threshold (€37,500) and they may view you as a small operator. Having a VAT number does lend an air of being a "bigger player".

You might also need to consider whether or not most of your clients will be in a position to reclaim the VAT that you charge them. If they can, then charging them VAT isn't really a problem.
 
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