tax versus mortgage

tmcds · 9 Sep 2010

I am self employed and income has dropped.
I need to put aside €1100 per month to cover VAT and income tax but the only way I can do this now is if I don't pay the mortgage, everything else is already cut to the bone! I have already agreed a repayment plan with revenue for last year but now can't save for the next bill. Every month I work puts me another €1100 more in debt with revenue. Any advice would be welcome.

callybags · 9 Sep 2010

I have replied to this as below in a separate thread.

You need to separate your business from your personal expenses (mortgage)

In theoty VAT should not be a problem as you are effectively a collection agent for the revenue and are just paying over what you have charged your customers. However, if your customers are late in paying your invoices, then you need to address this as it is causing you cash flow problems.

If your income has dropped significantly, then your income tax bill should be reduced accordingly.

Regarding your mortgage- if you are struggling to pay it, then it appears you are not paying yourself a sufficient "salary" out of your business. You need to assess your business to see is it viable to continue.

DB74 · 9 Sep 2010

If you are currently paying VAT on an invoice basis then you should contact Revenue to try to change to cash-receipts basis (if your turnover is less than €1m a year then you should qualify)

tmcds · 9 Sep 2010

thanks for that .

tax versus mortgage

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