Approaching the VAT Threshold

E

eirman

Registered User
Messages
121
A small builder friend of mine reckons that he will exceed the €37,500 VAT registration threshold next year.
He really doesn't want to register for VAT because of all the extra paperwork required.

I suggested that he only bill his customers for labour and let them pay for/buy the materials directly.
I'm sure that this is legal, but one problem he sees with it, is that he will loose his smallish markup (profit) on the materials.

I also suggested that some customers could pay him cash for materials and get the invoices made out to cash .....
the key element being, that this part of the transaction does not go through his bank account.
(He doesn't have to give all of these invoices to the customer)

Any thoughts?
 
Hi

I would be surprised if you get anyone on here to advise you because what you are suggesting is basically tax evasion.

Capnhand
 
But they are not. You are still providing the materials for them!

And you are trying to cover it up by getting the invoices from the supplier made out to cash. And you are also suggesting he can keep the margin he is making on the materials by not giving said invoices to the customer and pocketing the difference.
 
capnhand said:
But they are not. You are providing the materials for them!
Click to expand...
That's only in the latter scenario.

I'll suggest to him that the customer buys (and pays for) the materials them self and that the builder forgoes any thought of profit on those materials.

There can be no problem with this provided the invoice(s) is not made out to the builder.
 
He's much better off biting the bullet & registering for VAT. Not doing so & playing ducks and drakes with the system is all fine and well, but if anything goes wrong, Revenue will hammer him without a thought.
 
In the event of an audit,does your friend have outgoings in line with the profit on 700 a week?If he's running a van and billing for materials there and paying for liability insurance,there can't be much left to take as wages.
 
You must log in or register to reply here.
Back
Top