VAT dos and donts

[danash]

Hi,

I am just starting out in a new environment with a personal LTD company developing a software product and also providing management consultancy services to the industry.

I was wondering what are the legitimate VAT expenses that I can reclaim VAT on for my inputs. I am hearing differing tales about hotel expenses, conference attendance, meals et so would appreciate advice on what you see as acceptable to the Revenue. I am not looking for any shonky techniques....just the current practice.

For info I will be based in Ireland but selling my services to UK and EU companies using the Reverse charge mechanism but incurring most of my input expenses here in Dublin. I will be using EU hotels and transport systems to get around and my revenue will be in excess of the VAT thresholds.

Also...what is the revenue approach to use the consultancy revenue to support the software development by keeping my salary low....

 

[Branz]

Re
Also...what is the revenue approach to use the consultancy revenue to support the software development by keeping my salary low....

What have you in mind here from an accounting perspective?

Claiming VAT back on expenses is one thing, claiming the net of VAT amount as an expense in your P&L is another storey as you seem to appreciate from your post.
Most inputs into a business attract VAT and as such can be used in your VAT 3 return
Keep detailed records of all your meeting, local and abroad in relation to reclaiming the expenses.
AFAICR, The test is wholly, exclusively and necessarily for expenses incurred by an employee ( which u will be of the company but there are certain exclusions as you are a director) and
wholly and necessarily for business expenses in the CT calculation.

Reverse charge for consultancy: new to me.

http://www.revenue.ie/en/tax/vat/guide/supply-of-services.html

 

[danash]

I intend to take consultancy revenue from clients for my time and materials - pay myself part of that and utilise the rest to develop additional software necessary for a secondary ( soon to be primary ) product. The consultancy fee becomes the revenue of the company and part of it is used as an expense to pay developers. I take the rest in salary and normal expenses.

By reverse charge I mean I am charging no VAT as the place of delivery is outside of Ireland to EU companies. I wont have any sales VAT to offset my purchase VAT.

I am hearing differing opinions on whether for example I can deduct Portuguese VAT on a hotel for a conference attendance or whether it is just a gross business expense.

50 euro here and there can add up to a lot for me so I want to be sure what the practice is.....

 

[Branz]

Tks.
keeping my salary low
was the puzzle!

I believe being net recipient of VAT is fine but you had better be squeaky clean as they do attract more that the average number of audits/ queries

Re
what the practice is.....
as the IT consultants found out
its what the Revenue accepts as practice.

The conference expense as an attendee is always tricky, better if you present at it or a workshop on the fringes
Keep well and good luck

ps on another point
http://www.askaboutmoney.com/threads/help-understanding-the-closed-company-surcharge.191324/
has a useful link to the close company definitions etc