Partnership turnover query- Sales exceeding €75,000

tyler_d

Registered User
Messages
53
Good day,

For the past two years our turnover has not exceeded €75,000 and we have not charged vat for this reason. Our tax year ends Oct 31st and we could be over the €75,000 by then. Our knowledge of whats happens next is a little unclear. I thought that maybe we would have to take declare 23% out of all sales over €75,000 until the end of tax year.

However today I read today that you can offset the vat that i paid from purchases of stock, from your sales (see below from revenue website) .

Does this apply to me if I don't charge vat?

Thanks in advance,

T





How is the threshold determined?
For the purposes only of deciding if a person is obliged to register for VAT, the actual turnover may be reduced by an amount equivalent to the VAT borne on purchases of stock for re-sale.

Example

Annual purchases of stock for re-sale €60,000 (VAT Inc.)
[€48,780.60 plus €11,219.40 VAT at the standard rate]

Actual turnover €80,000 (VAT Inc)
Less
VAT on stock for re-sale (€11,219.40)
Turnover €68,780.60



As the business’ turnover is below the registration limit of €75,000 after the deduction of €11,219.40 VAT charged to them on purchases of stock, the business is not obliged to register.
 
That piece
For the purposes only of deciding if a person is obliged to register for VAT, the actual turnover may be reduced by an amount equivalent to the VAT borne on purchases of stock for re-sale.
is only for the threshold test
It is not a VAT accounting calculation.
The site also says
In the case of supplies in the State and intra-Community acquisitions, registration is obligatory where certain turnover thresholds are exceeded or are likely to be exceeded in any twelve-month period.

In addition, the VAT 12 months is not tied to your accounting period end.
 
Thank Branz. If I do exceed €75,000 I do have to pay vat on the amount over this, is that correct? Is it possible to claim back vat when i get over this amount in the same tax year?
 
it is not just on the excess over, its on the lot.
As I pasted above, if you think you are going to exceed it, then better to sign up now and start charging and recovering VAT going forward.
Other than admin, any other reason for not signing up.?
I dont excède the threshold but signed up anyway as it looks a lot more professional when dealing B2B
 
50% of sales is business to customer so thats why we haven't applied.

Currently we are around €62,000 with 3 months left. So If I register next month say around €70,000 then the €70,000 is fine. I don't have to apply Vat to it? Is this correct? From then on I charge vat and can recoup vat?

Apologies, for not being great with this.
 
I just pay VAT, not an expert so this is just my take on it.
Accounting period not relevant
If you look at the TR1 here
http://www.revenue.ie/en/tax/vat/guide/registration.html#section10
you will see the questions under VAT so they will know when you started.
Should be no issue looking back as its a 12 months looking forward but have all your ducks in a row if they ask :)
Are you on ROS because if so you can sign up from in there
 
50% of sales is business to customer so thats why we haven't applied.

Currently we are around €62,000 with 3 months left. So If I register next month say around €70,000 then the €70,000 is fine. I don't have to apply Vat to it? Is this correct? From then on I charge vat and can recoup vat?

Apologies, for not being great with this.
This sadly isn't how it works. If your turnover from the sale of goods for any current 12-month period exceeds or is likely to exceed €75,000, then you are obliged to register and account for VAT on the entirety, including backdating to the start of the applicable 12-month period. This is a classic catch-22 (you might well be better off turning away sales) which Revenue love enforcing.

Unless you're very clear on exactly what to do, you probably need proper professional advice.
 
There seems to be some room for flexibility on the €75k!!!

It depends on the margin. If the OP turnover is coming in at €82k and they have a margin of 50% then their input VAT on purchase for resale would be €7,666 therefore to compute the turnover for the threshold it's €82k -€7,666 = €74,334.

But that assumes an even spread over the year.

I'd agree with Tommy you need to go and talk to a profession as its a big risk to take when you are so close, of months 1&2 were low and the rest high you should be already registered.
 
Thanks Tommy and Joe. Appreciate the posts. I honestly didn't think we would get to €75,000 but the wholesale business has just been taking off As Tommy says I'll just have to turn sales away till I've registered for Vat. Cheers again.
 
Sorry Joe just on your previous point, our purchases would be almost €50,000 with vat of around €10,000 paid. Can we offset this against our sales of say €80,000 at the end of year?
 
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