Deregistering from VAT system ?

[rabbit]

I know someone whose business did not work out as well as expected and he is considering deregistering from the vat system, as his turnover is low enough that he does not need a vat number. In retrospect, it was a mistake getting a vat number. Has anyone ever done this - given back the vat number and the requirement to fill out all those vat forms / send off vat to the revenue commissioners ? Anyone know whats involved ?

 

[noodles]

I went through this a few years ago rabbit,

Not a big deal - just more paperwork and takes a few months processing! The details are on cro.ie or via VAT office , but basically you need to:
1. Ensure all VAT and director tax obligations re filed and up to date
2. Obtain tax clearance cert
3. Post a public notice in a national newspaper advising fo notice to cease trading - basically to ensure that any potential creditors are given adequate notice
4. Send all of the above to VAT office/CRO
You're done!

I found CRO abrupt and difficult to deal with on the phone tbh, but the revenue commissioners the complete opposite, really helpful and pleasant.

-N-

 

[hhhhhhhhhh]

I went through this a few years ago rabbit,

Not a big deal - just more paperwork and takes a few months processing! The details are on cro.ie or via VAT office , but basically you need to:
1. Ensure all VAT and director tax obligations re filed and up to date
2. Obtain tax clearance cert
3. Post a public notice in a national newspaper advising fo notice to cease trading - basically to ensure that any potential creditors are given adequate notice
4. Send all of the above to VAT office/CRO
You're done!

I found CRO abrupt and difficult to deal with on the phone tbh, but the revenue commissioners the complete opposite, really helpful and pleasant.

-N-

He only wants to dereigster for vat not dissolve the company, which I think you are talking about

 

[Clarkey]

I know someone whose business did not work out as well as expected and he is considering deregistering from the vat system, as his turnover is low enough that he does not need a vat number. In retrospect, it was a mistake getting a vat number. Has anyone ever done this - given back the vat number and the requirement to fill out all those vat forms / send off vat to the revenue commissioners ? Anyone know whats involved ?

[broken link removed]

He needs to fill out this form and send it to his local tax office to de register for VAT. If he has been in a net refund situation since he registered (i.e. has received more in VAT refunds than he has paid out in VAT) then this amount will have to be repaid to revenue. Other than that once he is under the VAT turnover threshold there shouldn't be any problems

 

[ButtermilkJa]

...In retrospect, it was a mistake getting a vat number...

Seems to me like there's more hassle involved in trying to get rid of it, rather than just keeping it. Any reason in particular why it was mistake? Just curious.

 

[rabbit]

Seems to me like there's more hassle involved in trying to get rid of it, rather than just keeping it. Any reason in particular why it was mistake? Just curious.

Because it is an added expense to the business. If the turnover is above a certain threshold then obviously there is no choice in the matter, the business has to pay vat. Thanks to all for your replies, I will pass the info on to my friend who mentioned it to me.

 

[money man]

If you are deregistering and you have a company vehicle which you received a vat rebate for but are still not in a net refund situation (where you have received more vat than you have paid) how does this effect it? When you sell the vehicle down the line do you have to pay the vat to the revenue? That is if you continue to trade but are no longer vat registered?

 

[contractor]

Because it is an added expense to the business. If the turnover is above a certain threshold then obviously there is no choice in the matter, the business has to pay vat. Thanks to all for your replies, I will pass the info on to my friend who mentioned it to me.

What is the threshold? How is it an added expense? Surely you will not be able to claim VAT back on your company expenses. Also how would you invoice your clients? Do you just issue the invoice ex-VAT? Curious because I suspect I am probably below the threshold.

 

[Graham_07]

What is the threshold?

Thresholds from 01/05/08 are sales of
- sale of goods €75,000
- services €37,500

If you are not registered for VAT then you charge the fee you have set for the item/job including any irrecoverable VAT you have suffered on purchases. You do not charge VAT and the customer gets no VAT input credit.

 

[money man]

Graham do you know what would happen in the situation i posted above? Will check with my accountant when i have a better idea what im talking about.

 

[Graham_07]

If you are deregistering and you have a company vehicle which you received a vat rebate for but are still not in a net refund situation (where you have received more vat than you have paid) how does this effect it? When you sell the vehicle down the line do you have to pay the vat to the revenue? That is if you continue to trade but are no longer vat registered?

Graham do you know what would happen in the situation i posted above? Will check with my accountant when i have a better idea what im talking about.

Do I read from your first post that you are, as of now, in a net payment situation, i.e. you have so far since you registered paid over to Revenue more VAT than you have claimed even including the claim for the VAT on the van?

 

[money man]

I will check the VAT3 forms but im almost certain that i am not in a net refund situation. It is roughly equal from memory.

 

[money man]

i have received a rebate of about 350 euro . if i pay this back on my next return jan/feb could i then de-register. then when i sell the vehicle in a year or so what is the effect vat wise?

 

[Graham_07]

The Guide to VAT at [broken link removed]

says :-

[START]Cancellation of registration

12.11 A person who has opted to register for VAT may, subject to conditions which may include the repayment of any excess of VAT deductions over payments, cancel his or her registration by arrangement with the local inspector of taxes. Similarly, a person whose turnover has fallen below the appropriate turnover threshold may have the registration cancelled. A person ceasing to trade should notify the inspector of taxes of this fact in order that the VAT registration number may be cancelled promptly.

This is important to note, otherwise return forms and demands for estimated VAT liability will continue to issue automatically.

Revenue will also cancel a person’s VAT registration if he or she has been registered in error, or he or she has ceased to be a taxable person. In circumstances where a person elects to register for VAT, a cancellation of registration may give rise to recovery by Revenue of all or some of the net VAT repaid to the person during the period of election. [END]

This suggests that once a trader has at least paid to Revenue more than they claimed, one can, if under the thrheshold, cancel with no further implications. However I may be open to correction on this where motor vehicles are involved. If , for example you claim VAT on a vehicle and, while still registered sell it then VAT would be due on the sale proceeds. I'd suggest getting your accountant to check into it more before any action is taken.