Vat

M

maryb

Registered User
Messages
17
I'm thinking of setting up a sole trader and am just wondering about VAT. I'd be providing goods and adding on VAT would make me uncompetitive. Is there any issue with husband and wife doing the same type of business and both being sole traders? So, my turnover would be under the 75k limit as would his....he is a full time employee
 
Every trader is entitled to the benefit of the relevant threshold. So if your husband and yourself, each, individually were operating as sole-traders then you would, each, be entitled to trade to the relevant threshold before registering for VAT. Each business would, of course, have it's own separate and distinct registration, bank account, set of books and end-of-year accounts.

However, if he is a full-time employee, when would he get the time to trade? Any situation where he was just a "figurehead" and the work and trading was all being done by you might be construed by Revenue as a tax avoidance or evasion mechanism and could be contested.

You say you would be providing goods, would this be to the general public or to other VAT registered persons? Remember if your sales are VATable then your purchases carry VAT too so it's VAT on your margin that is at issue, not on the sales.
 
It would be a part time business for him - I'm presently doing it part time, as well as having a full time job.
The goods - let's say for example that it's wedding cakes - are being sold to the general public. Adding on VAT increases the price significantly, and only the taxman benefits.
Is VAT chargeable on the amount over 75k or once your turnover goes over this then VAT is chargeable on the full amount - if turnover was 80k should there be 5k charged with VAT or the full amount?
 
maryb said:
if turnover was 80k should there be 5k charged with VAT or the full amount?
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The latter.

For what its worth, I would imagine that a husband and wife each running separate but otherwise similar 'businesses' from the same address would be a red flag for Revenue Audit, unless there were compelling business reasons for that particular arrangement.
 

+1
 
Section 8(3)(e) VATA72 provides for an "anti-fragmentation" rule where connected persons make supplies of goods or services of the same class. This helps ensure that group companies etc cannot artificially avoid VAT registration.

The anti-fragmentation rule works as follows:
Where there are two persons and one exercises controls over the other or both are under common control the combined turnover of their supplies is deemed to be the turnover of each for the application of the registration thresholds.

You should be aware that any person who is obliged to register for VAT and fails to do so is liable to a penalty of €4,000 (see Section 26 VATA72).

Section 8 VATA72 states that all taxable persons (i.e. businesses) who make taxable (i.e. VATable) supplies of goods or services in the State (Ireland) are "accountable persons".


In Irish VAT legislation, accountable persons, i.e. persons who must register for VAT include:
Persons whose turnover from the supply of taxable goods exceeds, or is likely to exceed €75,000 in any continuous period of 12 months (Section 8(3)(c) VATA72);

The word is likely means just that - if you are averaging towards breaching the threshold, you are required to register within 30 days.
 
Thanks for your informative replies.
If my supplier is in the UK and I am charged VAT by them, can I claim this back? Assuming not.
 
Also, have Revenue increased the VAT thresholds in recent years? Is there any kind of trend?
 
maryb said:
Thanks for your informative replies.
If my supplier is in the UK and I am charged VAT by them, can I claim this back? Assuming not.
Click to expand...

If you are registered for VAT in Ireland then you supply your UK supplier with your Irish VAT number. Supplies are then charged to you without VAT as "EU Acquisitions". This just means you do not pay the VAT on the supply to you. You are still liable to VAT on your supply.
 
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