VAT3 question

O

ohtwo

Registered User
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Hi

I have a limited company and have been filling out my VAT3 returns online for the past few months.

I've been using a software package for all my purchases and sales etc and that basically generates a VAT3 form at the end of a period.

Looking at it more closely recently I noticed the following:

I buy some stock from the UK for resale, and dont pay the VAT to the UK wholesaler.
Up to now I presumed the software package was processing these UK purchases correctly as it has a field for whether or not the purchase was made Intra EU.

Say for example I puchase items from the UK at €1000. I pay the UK company €1000, and as far as I'm concerned I then owe Revenue €215 in VAT for that transaction.

But the software package adds the same amount to both T1 (Sales) and T2 (Purchases) on the VAT3 form, which appears to me to be effectively cancelling out the €215 liability that I thought I should have had.

Ok, the above is very long-winded and not explained very well. If anyone understands my ramblings, do you know if the above is correct?

I have been on the revenue website and looked at the relevent documentation but I'm still not sure if I'm clear on it.

I will go to my accountant about it when I'm getting him to do my end-of-year, but for now I'm trying to figure out what is right or wrong before the July 19th deadline.

Thanks
 
If you purchase as you said from the UK then you do not owe any VAT for that transaction. The purchase is exempt once the UK company quotes your VAT number on their invoice.

Your software should separate the transaction so you can fill in the "Total goods from other EU countries" field.
 
thanks for that. Yes it seems that the software is doing just that, but in my own mind I presumed I had to pay over the 21.5% VAT for a UK transaction, as I do for my purchases within Ireland.
 
When you purchase in Ireland you pay the VAT to the retailer, and then reclaim the VAT from the Revenue - this is a NIL cost to you.

The same operates when you buy NIL VAT abroad - you account for the VAT at 21.5%, but reclaim the VAT at 21.5% - giving a NIL VAT position.
 
Just to confirm, what do the invoices say that you are receiving from the UK? is their VAT on them?
 
Hi Ohtwo,

This is a recurring them and I have posted on some previous threads, suggest to do a search on VAT and I am sure it will show up.

Just to be sure, you need to accrue a liability of 21.5% over the price you pay your UK supplier (who charges you zero VAT rate), but you are also entitled to claim a deductible for the same amount.

Now, there is a body of opinon that suggests because the effect is VAT neutral, not to bother adding the liability in T1 and claim the corresponding deductible in T2 on your VAT return. However, if you read the notes on your VAT3 return it clearly asks you for those figures, so in my view, it should be included.

You're on the right track in any event and would hope that the answers in this thread have answered your question

best regards,
Rudolf289
 
Thanks to all for your replies. It does clear it up for me.

In answer to jack2009....the UK invoices dont have VAT on them because I gave the suppliers my VAT number.

My concern only came to light this week when calculating my VAT liability. I was hoping I hadnt been doing something wrong for the last few VAT periods!
 
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